Mortgage blog: Government denies pressuring mutuals into joining Help to Buy
The government have denied claims that they put pressure on one of the UK's leading lenders to join its flagship Help to Buy scheme. Launched in October, take-up of the new initiative has been slow and now the Nationwide building society has confirmed that they have no plans to participate in Help to Buy.
Two leading mutuals have already confirmed that they won't be taking part in the scheme and believe they can fund competitive 95% deals without government help.
The Nationwide has become the first of the ‘big six' lenders to announce that it will not be joining the Help to Buy scheme. The initiative is designed to make competitive 95% mortgages widely available to first-time buyers and home movers but the mutual believes it can better fund these deals itself.
A spokesman from Nationwide said: "It is true that we are not planning to offer Help to Buy 2 at present as we are already very active in the market - as our interim results demonstrated."
The lender also refused to deny reports that the government had put pressure on it to join the mortgage scheme. A Treasury spokesman strongly denied the rumours, saying: "Help to Buy is a voluntary scheme. Participation is a commercial decision for lenders and, so far, over 65% of the mortgage market are committed to the scheme."
Coventry also set to reject Help to Buy
The UK's third largest mutual lender, the Coventry Building Society, has also announced that it will not be participating in the scheme. A spokeswoman for Coventry said: "Given the strength of our capital position, we are in a position to do this without using government schemes and for this reason have no current plans to join. The matter will be kept under review."
Paul Broadhead, head of mortgage policy at the Building Societies Association, defended mutuals who did not want to be part of Help to Buy. "Some mutuals will still be considering their options but others will have reached the conclusion that it is better value for them and their members to remain outside of the scheme," he said.
"Broadly, the government has got its objectives right with this scheme; early signs are that it is reducing the market failure in higher loan-to-value products by encouraging those large lenders that had not been operating in this space in recent months to come back and increase the supply, and that is to be welcomed."
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