National launch for industry-led mortgage scheme
A home building industry-led mortgage scheme that allows new build buyers to purchase with a 5% deposit has been launched nationally with 17 major builders after a successful regional pilot.
Nationwide is the latest major lender signed up to Deposit Unlock and will offer the product on new build properties for both first-time buyers and second steppers up to £750,000. Newcastle Building Society, which was the first lender to offer Deposit Unlock nationally following a successful trial in the north-east of England, has recently seen the first completions under the scheme. More lenders are expected to join in the new year.
With house prices rising, Deposit Unlock will help those who do not have access to large deposits or the Bank of Mum and Dad. It will provide a much-needed alternative to the Scottish Government’s Help to Buy scheme, which closes for good in March 2022. Together with the First Home Fund (also now closed), and demonstrating the demand for home ownership that exists in Scotland, the two schemes have already assisted more than 20,000 households since their respective launches.
The mortgage indemnity scheme has been developed by the Home Builders Federation and 17 of its largest members, alongside Homes for Scotland (HFS) and Deposit Unlock’s scheme manager Gallagher Re. It will be available on developments across England, Scotland and Wales and is open to all HBF and HFS members. More builders will be added in the coming weeks.
Upon completion of home purchases offered as part of the scheme, the developer funds a mortgage indemnity and deposits cash to cover any potential losses. The scheme greatly reduces risk for the lender, protecting them from a proportion of the potential loss in the event of any default.
Nicola Barclay, chief executive of HFS, said: “Ensuring people can buy a new build home is key to delivering the Scottish Government’s wider housing ambitions given the interdependencies that exist across the sector. Too many people are unable to realise their ambition of home ownership because they simply can’t afford the deposit required. The industry has worked hard to develop a sustainable solution that will help more prospective buyers onto the housing ladder and so enable builders to deliver more much-needed homes of all tenures.
“This launch is testament to the foresight and investment made by members of the home building industry. We are also grateful for the commitment shown by our two launch lender partners and look forward to welcoming others in the coming months.”
Stuart Miller, chief customer officer at Newcastle Building Society, said: “Deposit Unlock is a true innovation and great example of collaboration across the industry to help more people achieve the dream of home ownership. That ambition is now paying dividends as we’re seeing the first completions and I take a real sense of pride in the fact that families are now living in homes purchased through Deposit Unlock. Helping more people get on and up the property ladder is a key element of our purpose so I’m delighted that we were the trailblazers for this scheme.”
Andy Dean, head of new build at Nationwide Building Society, said: “Raising a deposit continues to remain one of the biggest challenges facing those looking to move into their first home or on to their next. That is why we are pleased to be supporting Deposit Unlock and it’s great to see that it is now being rolled out nationally, providing a real boost to the new build sector.
“Supply of new housing also remains key to supporting first-time buyers and second steppers. Given the current strong appetite for new build properties, the Deposit Unlock scheme is particularly timely, especially given the forthcoming end of the Help to Buy Equity Loan scheme.”
Steven Rance, managing partner, mortgage indemnity at Gallagher Re, said: “The rollout of Deposit Unlock nationwide marks a significant milestone for everyone involved in developing the scheme since it was first conceived. It is a brilliant example of cross-sector collaboration and innovation where house builders, lenders and the insurance industry have come together to address an important social challenge. Deposit Unlock will enable home ownership to become an affordable and realistic ambition for many more people, so we are delighted to play our part in its development and launch.”
The pilot in the north-east of England that was launched in June and saw Newcastle Building Society offering mortgages through the scheme on the sites of four participating builders. The first successful completions through the scheme were announced last week. The building society then rolled out the scheme nationally in September with a limited number of builders, in advance of the Nationwide announcing in October its intention to join Deposit Unlock.