Finance Matters

Posts Tagged ‘Nationwide Building Society’

The Government launches its NewBuy mortgage guarantee scheme in March, which will help house buyers by underwriting 95% mortgages on new-build properties up to £500,000 in value.

The scheme depends on having sufficient sites available to house builders and housing minister Grant Shapps revealed today that sufficient land for 80,000 properties has already been identified.

Mr Shapps said he is now working with the BBC, Network Rail, Royal Mail and public sector organisations such as HM Treasury and the Ministry of Justice to identify further unused sites for housebuilding.

He expects enough land for 100,000 homes to be released by 2015.

The NewBuy mortgage guarantee scheme is an extension of the New Build Indemnity Scheme which was announced in November.

The initial scheme was designed to help first-time buyers, but the NewBuy scheme extends this help to people who wish to move house.

Mr Shapps revealed a number of other measures to boost the housing market, including plans to devolve power from Whitehall to town halls and to allow councils to keep rents collected from council tenants and invest the money in their housing stock.

Councils previously had to surrender social rents to the government, which then redistributed the revenue, leaving some councils with less than half the amount they collected.

Speaking to housing sector organisations, Mr Shapps said: “I’m pulling out all the stops for those who want to get on the property ladder, so from March the NewBuy Guarantee scheme will be on hand to help people buying newly built properties with just a fraction of the deposit they would normally need.”

Nationwide Building Society is launching an advertising campaign to highlight its efforts to support first-time buyers.

The building society claims it is doing more than any other lender for first-time buyers by providing Save to Buy and limited liability guarantor mortgages, online guides to the mortgage process, discounted fees and by participating in New Build Indemnity Scheme.

Norwich & Peterborough Building Society (N&P) has launched a low rate, low fee mortgage to attract buyers who plan to stay in their property for a longer period of time.

The ten-year fixed rate mortgage offers an interest rate of just 3.99 per cent APR, making it one of the cheapest deals on the market.

It is available to borrowers with 75 per cent loan-to-value ratio and the fee is just £295.

Borrowers will receive a free valuation and either free legal fees for remortgages or £200 cashback.

N&P product manager, Richard Barker, said: “We know that this competitive rate will be welcome news for those who wish to fix for a longer period of time giving them the certainty of what their monthly payments will be for the duration of their loan”.

Earlier this month, Nationwide Building Society launched a two-year fixed-rate mortgage with a loan-to-value ratio of 90 per cent for low-deposit buyers.

Borrowers willing to pay a £900 fee will receive a rate of 5.29 per cent or the mortgage is available with no fee at a rate of 5.69 per cent.

For those with a bigger deposit, a rate of 2.99 per cent is available at 60 per cent LTV with a fee of £900.

Despite the flurry of new offers in the market place providing welcome competition, the Council of Mortgage Lenders (CML) warned that the uncertainty created by the ongoing eurozone crisis makes it difficult to predict how the mortgage market will develop in 2012.

In December 2011 gross mortgage lending totalled £11.7bn, 12 per cent higher than December 2010, but a 12 per cent decline compared with the previous month.

Some analysts are predicting that house prices could fall by up to 10 per cent in 2012.

The latest house price figures from Nationwide Building Society contradict yesterday’s news from the Land Registry that house prices have fallen over the past year.

Nationwide today said that house prices are ‘surprisingly resilient’ with November’s figures showing a year-on-year increase of 1.6%.

In contrast the latest Land Registry figures showed a 3.2 per cent fall in prices over the year.

Nationwide’s house price survey, which is based on its own mortgage data, showed house prices continuing an upward trend in November, when they increased by 0.4 per cent to £165,798.

In October 2011 they grew by 0.8 per cent, compared with the same month in 2010.

The building society also reported that the number of mortgages approved for house purchase, but not yet completed, increased to 52,743 in October, the highest level since December 2009.

Nationwide expects house prices to either remain steady, or to fall in the next 12 months, due to the uncertain economic climate.

Robert Gardner, the Nationwide Building Society’s chief economist, said: “with the UK economic recovery expected to remain sluggish well into 2012, house price growth is likely to remain soft, with prices moving sideways or drifting modestly lower over the next twelve months”.

The market for new homes is struggling in the face of high levels of unemployment, wage freezes and other pressures on household incomes causing consumer confidence to fall.

With the Chancellor due to deliver his Autumn Statement imminently, Nationwide is calling for the Stamp Duty threshold for first-time buyers to be kept at £250,000.

The threshold is due to end in March 2012 but Nationwide warns that this could deter many first-time buyers from entering the housing market.

The building society also wants the chancellor to increase the annual cash ISA limit to £10,680, the same as the equity ISA limit, to help prospective house buyers save for a deposit.

Despite the slump in the housing market, Nationwide Building Society’s gross mortgage lending increased by 48% to £8.9 billion in the six months to September.

Although the number of first-time buyers in the market continued to fall, Nationwide lent more than £1.2 billion to this group in the first half of the year, 3 per cent more than it did in the previous year.

Over the same period, Nationwide’s subsidiary The Mortgage Works doubled its gross mortgage lending to £2.6 billion.

Graham Beale, Nationwide’s chief executive, said: “It is particularly pleasing to see a 48% increase in our gross mortgage lending, which demonstrates our commitment to supporting growth in the economy as well as meeting the needs of our borrowers”.

Nationwide also reported a 17 per cent rise in underlying pre-tax profits to £172 million in the six months to the end of September, compared with the same period in the previous year.

Although low interest rates are making life difficult for savers, the building society saw a 250 per cent increase in the rate of cash deposited in its savings accounts to £1.4 billion, making it the second largest savings provider in the UK.

Despite the positive results, Nationwide expects conditions to remain difficult until the eurozone crisis is resolved and the UK economy stabilises.

Nationwide has confirmed that it will participate in the Government’s newly announced New Build Indemnity Scheme.

The scheme, which is designed to boost the housing market, will help prospective buyers who are unable to raise the large deposits currently needed to secure a mortgage.

It will allow first time buyers to secure loans on newly built homes with only a 5% deposit, with security for the loan being provided by the Government and housebuilders.

Nationwide already offers a 95% mortgage with a rate of 6.14% through its Save to Buy scheme, and it has not yet been decided if the New Build Indemnity Scheme will make it possible for the building society to cut rates.

New figures from the Halifax show a 1.2 per cent increase in house prices in October, however compared with a year ago they have fallen by 1.8 per cent.

In the three months to the end of October, house prices fell by 0.3 per cent, compared with the previous quarter, representing the first fall since June, according to the Halifax’s own mortgage data.

However, the Halifax said that despite the difficult economic climate the housing market had remained “highly resilient”.

It also said that it expected the exceptionally low official interest rates to continue to support the housing market.

The Halifax’s findings broadly support Nationwide Building Society’s recent figures showing a year-on-year rise of 0.8 per cent in October.

Over the country as a whole, there is concern that the north/south disparity in house prices is increasing as a result of the Olympics.

Recent Land Registry figures indicate significant differences in price changes in different parts of the UK.

While house prices in London increased by 0.3 per cent in September compare with the previous month, they fell by 3.9 per cent in the North East of England.

On an annual basis the disparity is even more pronounced, with London prices increasing by 2.7 per cent while prices in the North East of England fell by 8.2 per cent.

Rightmove has also reported an increase in the north south divide, with an average asking price of £336,743 in the south of England, compared with £164,347 in the north, a difference of £170,000.

The disparity is particularly noticeable for properties near the Olympic venues, which are commanding premium prices.

Rightmove based its figures on 98,402 asking prices for houses placed on sale by agents between 11 September and 8 October and advertised on Rightmove.co.uk.

The difference between prices in the north and south of England is now the widest ever recorded by Rightmove.