Liquid error: wrong number of arguments (2 for 1) Help To Buy Mortgage Rates Could Hit 6% | Marsh & Parsons Sales and Lettings Estate Agents London

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Help To Buy Mortgage Rates Could Hit 6%

Sun 06 Oct 2013

Help to Buy 2 interest rates could be more than twice as high as standard deals, with lenders preparing to chargas

as much as 6%.

As lenders rush to publish their mortgage rates under the new scheme, weekend press reports have quoted

unnamed bankers saying they could charge as much as 5% or 6% for two and five-year fixed rate mortgages.

Under the second phase of the scheme, buyers have to put down a 5% deposit, with the government

guaranteeing any mortgage borrowing above 80% of the propertys value.

An interest rate of 6% on the remaining loan would look prohibitive compared to much cheaper standard rates

available on 80% LTV loans. Tesco Bank, for example has just launched a new two-year fixed-rate to 80% LTV

charging 2.69%.

This could cut enthusiasm for the scheme, but may also reduce fears that it could lead to a housing bubble,

according to a report on

Recent reports have suggested that as many as one in three buyers could turn to the scheme.

The Treasury is set to announce what it will charge banks for its guarantees on Tuesday, although this is thought

to be about 0.9% of the total mortgage.

So far, only state-backed RBS and Lloyds have committed to the second phase of the scheme. Other larger

lenders, such as Barclays, have refused to say what they will do.

But Help to Buy 2 Will still stimulate the UK housing market and increase the volume of homes for sale, said

Peter Rollings, chief executive at Marsh & Parsons. "The scheme will help to stimulate the UK housing market

over the short term like a shot of adrenalin.

Outside London the market desperately needs this impetus as prices have risen anaemically for some time but

in real terms they havent risen for a number of years. But in London over the last 12 months we have seen price

increases of between 10% to 15%.

Yet the capital needs this stimulus to free up mid-ladder buyers who want to become first time sellers. This will

create a much healthier balance between supply and demand and its these buyers who need help to meet often

stringent lending criteria of the banks.

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