Deposit Unlock Mortgages Launched Nationally
Posted 22 November 2021 by
Keith OsborneDeposit Unlock, the housebuilding industry-led mortgage scheme that allows new build buyers to purchase with a 5% deposit, has now been launched nationally with 17 major builders taking part, following a successful regional pilot.
Nationwide is the latest major lender signed up to Deposit Unlock and will offer the product on new build properties for both first-time buyers and second steppers up to £750,000. Newcastle Building Society, which was the first lender to offer Deposit Unlock nationally following a successful trial in the North East of England, has recently seen the first completions under the scheme. More lenders are expected to join in the new year.
With house prices rising, Deposit Unlock will help open up the new build market to more borrowers who do not have access to large deposits or the ‘Bank of Mum and Dad’, and help soften the blow of the withdrawal of the Help to Buy Equity Loan scheme, that has been so important for homebuyers and housing supply over recent years. Help to Buy has already assisted more than a third-of-a-million households to purchase a new build home since its launch in 2013 and been a major contributor to a doubling of housing supply over the past eight years and 70,000 equity loans have been fully paid back by homeowners, generating a 10% return for the Exchequer – some £315million.
The mortgage indemnity scheme has been developed by the Home Builders Federation (HBF) and 17 of its largest members, alongside Homes for Scotland (HfS) and Deposit Unlock’s scheme manager Gallagher Re. It will be available on developments across England, Scotland and Wales and is open to all HBF and HfS members. More builders will be added in the coming weeks.
Beaumont at Warwick Gates (David Wilson Homes)
Upon completion of home purchases offered as part of the scheme the developer funds a mortgage indemnity and deposits cash to cover any potential losses. The scheme greatly reduces risk for the lender, protecting them from a proportion of the potential loss in the event of any default.
The participating housebuilders are:
Stewart Baseley, executive chairman of HBF, said: “Ensuring people can buy a new build home is key to the industry’s ability to deliver the government’s housing ambitions. Too many people are unable to realise their ambition of homeownership because they simply can’t afford the deposit required. The industry has worked hard to develop a sustainable solution that will help more prospective buyers onto the housing ladder, maintain demand and so enable builders deliver more desperately needed homes.
“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 programme closing in 2023 a new option was required. This launch is testament to the foresight and investment made by 17 of our members. We are also grateful for the commitment shown by our two launch lender partners and look forward to welcoming others in the coming months.”
Harrier Chase (Barratt Homes)
Stuart Miller, chief customer officer at Newcastle Building Society, said: “Deposit Unlock is a true innovation and great example of collaboration across the industry to help more people achieve the dream of homeownership. That ambition is now paying dividends as we’re seeing the first completions and I take a real sense of pride in the fact that families are now living in homes purchased through Deposit Unlock. Helping more people get on and up the property ladder is a key element of our purpose so I’m delighted that we were the trailblazers for this scheme.”
Andy Dean, head of new build at Nationwide Building Society, said: “Raising a deposit continues to remain one of the biggest challenges facing those looking to move into their first home or on to their next. That is why we are pleased to be supporting Deposit Unlock and it’s great to see that it is now being rolled out nationally, providing a real boost to the new build sector.
“Supply of new housing also remains key to supporting first-time buyers and second steppers. Given the current strong appetite for new build properties, the Deposit Unlock scheme is particularly timely, especially given the forthcoming end of the Help to Buy Equity Loan scheme.”
Steven Rance, managing partner, mortgage indemnity at Gallagher Re, said: “The rollout of Deposit Unlock nationwide marks a significant milestone for everyone involved in developing the scheme since it was first conceived. It is a brilliant example of cross-sector collaboration and innovation where housebuilders, lenders and the insurance industry have come together to address an important social challenge. Deposit Unlock will enable home ownership to become an affordable and realistic ambition for many more people, so we are delighted to play our part in its development and launch.”
The pilot in the North East that was launched in June and saw Newcastle Building Society offering mortgages through the scheme on the sites of four participating builders. The first successful completions through the scheme were announced last week. The building society then rolled out the scheme nationally in September with a limited number of builders, in advance of the Nationwide announcing in October its intention to join Deposit Unlock.