Nationwide Building Society has become the largest lender to sign up to 95% LTV lending through the Deposit Unlock mortgage indemnity scheme.
It joins Newcastle Building Society, which has already joined the initiative developed by housebuilders, lenders and insurers.
From today, Nationwide will offer mortgages on newbuild properties for both first-time buyers and second steppers up to the value of £750,000.
The society resumed 90% LTV lending to first-time buyers in July 2020 and returned to 95% LTV outside the government’s Mortgage Guarantee Scheme in May 2021.
The Deposit Unlock scheme is designed to open up the newbuild market to borrowers with small deposits and, unlike the Help to Buy scheme, it is available to second steppers as well as first-time buyers.
It is set to provide an alternative for home buyers when the Help to Buy Equity Loan scheme comes to an end in March 2023.
The scheme is available through mortgage brokers on standard new-build loans of between £25,000 and £750,000.
Borrowers using Deposit Unlock will have access to the Nationwide’s range of 95% LTV mortgages, currently starting from 2.89%, which they can use to buy a house or flat.
Deposit Unlock has been developed by global reinsurance broker Gallagher Re in partnership with the Home Builders Federation (HBF). Gallagher Re will be administering and managing the insurance-backed scheme.
The scheme will be available on properties sold by the home builders that have worked with HBF on developing the product on sites across England, Scotland and Wales.
The number of participating housebuilders is set to expand over the coming months with more HBF and Homes for Scotland members having the opportunity to participate.
As well as being able to access the scheme, Nationwide borrowers purchasing a newbuild property will also be able to benefit from the Society’s Green Reward – assuming the home has a Standard Assessment Procedure (SAP) rating of at least 86+, which is equivalent to an Energy Performance Certificate (EPC) of at least a high B.
The Green Reward, which is aimed at encouraging people to consider buying greener homes, offers a greater level of cashback to those purchasing the most energy-efficient properties.
This ranges from £250 for a property rated at SAP 86 to 91 (high EPC-B rating) to £500 for a home with an SAP rating of 92 or above (EPC-A rated).
The green boost is on top of the £500 cashback that Nationwide offers to all first-time buyers.
Nationwide Building Society director of mortgages Henry Jordan says: “The need for more new homes has never been more apparent and we are keen to support the Deposit Unlock scheme – giving those with smaller deposits further hope that they can get a home of their own. The scheme will be a long-term alternative to the Help to Buy Equity Loan scheme, which is due to end in around 18 months’ time.
“During the pandemic we spent much more time in our homes and for many of us it highlighted the need for a more suitable property.
“Many people are looking for a home that is energy efficient as climate change becomes a priority and energy bills continue to rise.
“Our homes are where we have one of the biggest individual impacts on climate change and we remain committed to helping make the homes we lend on greener and more sustainable, which is why we continue to reward those who buy the most energy efficient properties with cashback offer under our Green Reward scheme.”
Home Builders Federation managing director Neil Jefferson says: “We’re delighted to be working with Nationwide to make Deposit Unlock available to homebuyers all over the country.
“Home builders have stepped up and developed a privately-funded product in Deposit Unlock which will provide buyers with a route to home ownership, including for first-time buyers without vast deposits. “Nationwide’s involvement demonstrates a very welcome commitment not only to their customers but also to the new homes market, helping us to tackle our long-term housing affordability crisis.
“With the new Help to Buy scheme reducing access to high Loan-to-Value mortgages in some regions and with the scheme winding down from the middle of next year, Deposit Unlock will help households onto the housing ladder and give developers confidence to invest in new land and labour to build on the massive housing supply increases of recent years.”
Gallagher Re managing partner of mortgage indemnity reinsurance Steven Rance says: “Right from Deposit Unlock’s earliest days in development, Nationwide recognised the scheme’s potential to become a long-term, sustainable solution that could unlock the return of 95% LTV mortgages in the new build space – at no cost to the tax-payer and at significantly reduced risk to lenders.
“Now, a year later, we are delighted to welcome Britain’s biggest building society as the first major lender to go live with the house builder-owned scheme, massively extending its reach to help low-deposit buyers right across England, Scotland and Wales realise their dream of home ownership.
“Deposit Unlock demonstrates cross-industry collaboration at its best, with house builders, lenders and the insurance industry coming together for the common good.”
