As of tomorrow (Thursday 22nd December) NatWest will launch two new 95% loan-to-value (LTV) products and subsequently withdraw from the Mortgage Guarantee Scheme.
The new 95% LTV products are for purchases only; however they are available not just to first-time buyers, but home movers, and also those who may have background properties.
Craig Fish, founder & director at Lodestone Mortgages & Protection, welcomed the move: “If ever there was an indication that the mortgage market is open for business, this is it.
“Not only are NatWest sticking its head above the parapet, but it is also doing it in style by withdrawing from the Government scheme that provides them with a guarantee.
“This is a clear indication to all that it had money to lend and that it doesn’t believe there will be too much of a slide in property prices.
“I do fear for its already stretched service levels, though. However, this is a positive signal that first-time buyers will welcome.”
While Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said it was unsurprising considering the cost of the scheme: “From the conversations I have had with lenders over the years, the Government’s Mortgage Guarantee Scheme was expensive to be part of, with many lenders choosing from the outset to lend at 95% LTV without using the scheme.
“It would be interesting to know if the costs of being part of the scheme have increased, given the projections for property prices in 2023, or if some other conditions have been imposed that NatWest didn’t want to agree to.”
Matthew Jackson, director at Mint FS, had his own take: “I have been wracking my brains on this one.
“NatWest could offer 95% lending through the government mortgage indemnity scheme where all borrowing above 80% LTV is indemnified by the Government.
“But I am guessing they would then be required to price similarly to other lenders who offer this scheme.
“By withdrawing, they can still in name offer 95% mortgages, which is of course good for PR as they’re a lender who supports first-time buyers and home movers with small deposits.”
Lewis Shaw, owner and mortgage broker at Riverside Mortgages, concluded: “This is unsurprising because the Mortgage Guarantee Scheme did sod all in reality.
“At the time it was launched, lenders were already coming back into the higher LTV market anyway.
“It was about as necessary as a Stamp Duty cut when anyone with half a brain cell understood that we didn’t need anything to stimulate demand coming out of a lockdown.
“Get rid of politicians out of the mortgage and property markets altogether. Whilst they may mean well, it always causes further problems somewhere else in the food chain.”
