The Council of Mortgage Lenders (CML) has revealed that the recently-launched NewBuy scheme has made an encouraging start, with reservations for properties now totalling more than 600.
The initiative, launched in the spring, enables lenders to offer mortgages for up to 95% of the value of a newly-built property, partially underwritten by guarantees provided both by the government and the builder of the new home.
The five largest lenders are already offering mortgages under the scheme, and others are considering whether to join. There are now 18 builders participating in NewBuy, with, according to the CML, 12 more on their way to joining.
The CML said that most builders would consider selling homes under the scheme with a mortgage provided by any lender, as this widens the choice of finance for potential buyers under the scheme. For their part, lenders are free to choose to work with any builder taking part in NewBuy.
Although the Home Builders Federation has indicated that more than 600 reservations have now been agreed, the number of completed transactions remains lower.
This is to be expected, the CML said, adding that the scheme is gathering momentum in a way similar to the earlier FirstBuy and Home Buy Direct initiatives, both of which gathered pace after several months.
NewBuy is confined to England at present, although the CML says it is working with the Scottish government and Homes for Scotland on a scheme similar to NewBuy called MI New Home. The Scottish scheme is expected to launch in September.
Meanwhile, the Welsh government has begun discussions with interested parties on a similar initiative, and we will be taking part in these as they continue in the coming weeks. In addition, exploratory discussions have also begun in Northern Ireland.