Newcastle Building Society has launched a range of 95% LTV deals for new-build properties through the “Deposit Unlock” initiative, which is a private sector mortgage indemnity scheme.

Rates start at 3.5% for a two-year fixed rate or 3.75% for a five-year fixed rate with no fees and a free valuation.

Unlike the government-funded mortgage guarantee scheme, these products are backed by a private sector indemnity which has been developed by the Home Builders Federation (HBF) and insurance brokers Gallagher Re.

Newcastle’s deals will be available on selected developments in the North through four participating housebuilders: Barratt, Bellway, Keepmoat and Vistry.

The scheme aims to help borrowers secure a new-build home up to a value of £330,000 with a deposit of just 5%.  

Newcastle Building Society chief customer officer Stuart Miller says: “More than ever, we need to help provide more options for low-deposit borrowers looking to buy a new-build home. 

“Deposit Unlock is a truly innovative initiative and we’re pleased to be the first lender to offer products under the scheme.”

Newcastle is also one of the lenders supporting the government’s First Homes scheme.

Miller adds: “Both Deposit Unlock and First Homes are examples of forward-thinking collaboration, bringing new products to the market to help people achieve the dream of owning their own home.”

Building Societies Association head of mortgage and housing policy Paul Broadhead says:  “Deposit Unlock is a great example of a private sector initiative which addresses an important social challenge – helping people to buy their own home. 

“This support for higher loan to value lending on new homes will be particularly helpful for younger buyers who often struggle to save for a deposit while paying rent at the same time.”

HBF executive chairman Stewart Baseley says: “Ensuring people can buy a new build home is key to the industry’s ability to deliver the government’s housing ambitions. 

“Help to Buy has played a significant role in supporting increases in housing supply in recent years and has turned home ownership dreams into reality for hundreds of thousands of households. 

“However, with the new Help to Buy scheme now less accessible in some regional markets including many parts of northern England, and with the overall programme due to end in 2023, the industry is striving to develop a sustainable solution to help more prospective buyers onto the housing ladder.”

Intermediary Mortgage Lenders Association executive director Kate Davies says: “Today’s news of the launch of Deposit Unlock is a positive step forward in the provision of low-deposit lending and will open another door for those wanting to buy properties that have traditionally been more difficult to finance – such as new-build homes and flats. 

“The government’s announcement that its Help to Buy Equity Loan scheme would be withdrawn in 2023 signalled a clear need for viable alternatives like these, to help more people step onto the property ladder, as well as progressing up it.

“There are, of course, other providers developing innovative schemes aimed at providing an alternative to Help to Buy. 

“Imla is pleased to have been able to facilitate discussions between providers and members and we are delighted that one of our members – Newcastle Building Society – is the first to launch with Deposit Unlock.  

“It will be interesting to see how this launch encourages and stimulates other providers and lenders to continue to find creative solutions to the challenges faced by buyers. 

“Growing competition in this area can only benefit consumers, as they seek products which fit their individual needs.”