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The government’s NewBuy scheme has come under fire from a house builder that claims lenders are charging excessive rates.

The plan was to get the first-time buyer ewnd of the market working again by offering 95 per cent mortgages on new-build properties.

The government and the construciton industry is due to finanace the scheme, but there are now claims that the government is being undermined.

NewBuy was persoanlly promoted by Prime Minister David Cameron who believes house ownership and important part of the recovery of the UK economy
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He has also introduced the right to buy scheme that marked Margaret Thatcher’s premiership with regard to the housing industry.

NewBuy is intende to kick-start the housing market but there are now concerns that lenders are charghing too much.

Mike Farley from Persimmon, said rates should be lower to allow more people on to the scheme.

His remarks were prompted by ledners who are backing the scheme, such as Barclays and NatWest, have put their rates up.

The newest bank to join the scheme, Halifax, has set its rates at about six per cent.

Mr Farley said: “The concept is right and the demand is there.

“What is hindering its take-off is the rates. We are finding the affordability is not right because the rates lenders have launched at are around six per cent.”

Roger Humber of the House Builders Association said the scheme “is beginning to look as if it could be very embarrassing” for the government.

Questions had already been raised about NewBuy after the Daily Telegraph revealed a letter in which the Home Builders Federation, which helped to develop the scheme, said it was “not at all what was envisaged”.

A spokesman for the Council of Mortgage Lenders said the rates are “not unattractive” for 95 per cent loan-to-value mortgages and that, although indemnity protects lenders, their pricing still has to reflect the risks involved.

The warning came as Persimmon said its order book rose nine per cent over the first 15 weeks of this year to £1.24 billion.

Max Erskine from remortgagenow.co said: “There is bound to be some gamesmanship from the builders and the lenders.

“Both want the best for themselves; and what is best for themselves might not be best for the other.

“The scheme ought to benefit both and more importantly it should help those who are trying to get on the property ladder.”

This article was first published by http://www.remortgage-toady.co.uk

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