Sparks of hope for first time buyer mortgage customers

06 August 2008 / by Daniela Gieseler
After a lean spell for would-be homeowners, some signs of hope start to appear on the horizon as mortgage lenders drop interest rates and launch initiatives such as the 'Double Your Deposit' scheme instigated by Halifax in conjunction with Persimmon Homes.

The largest British mortgage lender, Halifax, has teamed up with Persimmon to enable first time buyers to bridge the gap between their savings and the minimum deposit required to buy their first home by making regular payments into a dedicated savings account with Halifax or Bank of Scotland.

Those participating in the scheme have to transfer money into the savings account for at least six months, up to a limit of £5,000. If they then decide to use the money as a deposit on a Persimmon new-build, Persimmon Homes will match, and thereby double the deposit – so consumers could end up with a £10,000 deposit on their home.

The scheme has been launched to encourage people to save rather than spend, and give them the confidence that, after all the doom and gloom, they might still be able to secure a first time buyer mortgage and afford their own property in the not too distant future.

"This is a great deal for first time buyers," Mike Bottomley, national new build manager for Halifax, commented.

"By opening a new Halifax account and saving regularly, potential home owners are planning for the financial commitment of buying their first home. Doubling their deposit in this way should be a major incentive for first time buyers."

The Royal Bank of Scotland and NatWest yesterday announced a further cut in their mortgage rates by up to 0.30 per cent and a reduction in the fees of up to £100.

Andy Fell, Director of Branch Mortgages at the Bank, said "In these uncertain times, we are committed to helping borrowers who are looking for either their first mortgage or a new competitive deal. We are giving practical support by providing lower rates on all our fixed and tracker mortgages and at the same time."

In addition, the Government is considering a suspension of stamp duty on properties with a value of less than £250,000 as part of an aid package to kick-start the slumping housing market.

While a deferment or tax holiday would be a great incentive for first time buyers who so far have been deterred by this additional payment of one per cent on top of the purchase price, critics say it was only a means to an end for the Government to score points and would not really reverse the slump of the housing market.

A spokesman for the Council of Mortgage Lenders (CML) welcomed a possible reform of stamp duty: "In a weakening housing market, stamp duty acts as a material disincentive to moving and reforms would help first time buyers and the wider housing market."

However, he warned that the key problem of the current property crisis, the lack of available mortgage finance, would not be solved by this step: "Removing stamp duty only addresses buyer confidence, not the wider problems in the financial markets."

© Fair Investment Company Ltd