Britain’s biggest building society has put its weight behind the initiative as part of its wider efforts to get people into homes of their own at a time house prices remain high and options are limited for many. It follows the Society becoming the first major lender to resume 90% LTV lending to first-time buyers in July 2020 and the return to 95% LTV outside the government’s Mortgage Guarantee Scheme in May 2021.
Deposit Unlock will help open up the newbuild market to more borrowers with a small deposit as unlike the Help to Buy scheme it is available to second steppers as well as first-time buyers. Deposit Unlock will provide a much-needed alternative for the newbuild market after the Help to Buy Equity Loan scheme for first-time buyers comes to an end in March 2023.
The scheme is available through mortgage brokers on standard new build loans1 of between £25,000 and £750,000. Borrowers using Deposit Unlock will have access to the Society’s range of 95% LTV mortgages, currently starting from 2.89%, which they can use to buy a house or flat2.
In July, the Society announced that it had joined forces with more than 25 major organisations to tackle the UK housing crisis, establishing four cross-industry action groups to collaborate and help solve existing and future housing problems. It is hoped the Deposit Unlock scheme helps encourage the creation of more quality sustainable homes – the key focus of one of the action groups.
Deposit Unlock has been developed by Gallagher Re in partnership with the Home Builders Federation (HBF) and leading house builders, with the global reinsurance broker now administering and managing the insurance-backed scheme. The scheme will be available via the home builders that have worked with HBF on developing the product. It will initially be available on more than 1,000 new build sites across England, Scotland and Wales with the builders signed up to the scheme already responsible for around 100,000 completions each year. This will expand over the following months with more HBF and Homes for Scotland members having the opportunity to participate.
As well as being able to access the scheme, Nationwide borrowers purchasing a newbuild property will also be able to benefit from the Society’s Green Reward – assuming the home has a Standard Assessment Procedure (SAP) rating of at least 86+, which is equivalent to an Energy Performance Certificate (EPC) of at least a high B. The Green Reward, which is aimed at encouraging people to consider buying greener homes, offers a greater level of cashback to those purchasing the most energy-efficient properties. This ranges from £250 for a property rated at SAP 86 to 91 (high EPC-B rating) to £500 for a home with an SAP rating of 92 or above (EPC-A rated).
The green boost could net first-time buyers a total cashback of £1,000 if they take out a mortgage with the Society on a property that is SAP 92+ (EPC A-rated), since the Green Reward comes in addition to the £500 cashback first-time buyers already receive when buying their first home with Nationwide.
Full details on Deposit unlock can be found here.
Henry Jordan, Director of Mortgages at Nationwide Building Society, said: “The need for more new homes has never been more apparent and we are keen to support the Deposit Unlock scheme – giving those with smaller deposits further hope that they can get a home of their own. The scheme will be a long-term alternative to the Help to Buy Equity Loan scheme, which is due to end in around 18 months’ time.
“During the pandemic we spent much more time in our homes and for many of us it highlighted the need for a more suitable property. Many people are looking for a home that is energy efficient as climate change becomes a priority and energy bills continue to rise. Our homes are where we have one of the biggest individual impacts on climate change and we remain committed to helping make the homes we lend on greener and more sustainable, which is why we continue to reward those who buy the most energy efficient properties with cashback offer under our Green Reward scheme.”
Nationwide has set itself an ambitious target that half of its mortgage book will be EPC C rated or above by 2030.
Neil Jefferson, Managing Director at the Home Builders Federation, said: “We’re delighted to be working with Nationwide to make Deposit Unlock available to homebuyers all over the country. Home builders have stepped up and developed a privately-funded product in Deposit Unlock which will provide buyers with a route to home ownership, including for first-time buyers without vast deposits. Nationwide’s involvement demonstrates a very welcome commitment not only to their customers but also to the new homes market, helping us to tackle our long-term housing affordability crisis.
“With the new Help to Buy scheme reducing access to high Loan-to-Value mortgages in some regions and with the scheme winding down from the middle of next year, Deposit Unlock will help households onto the housing ladder and give developers confidence to invest in new land and labour to build on the massive housing supply increases of recent years.”
Steven Rance, Managing Partner of mortgage indemnity reinsurance at Gallagher Re, said: “Right from Deposit Unlock’s earliest days in development, Nationwide recognised the scheme’s potential to become a long-term, sustainable solution that could unlock the return of 95% LTV mortgages in the new build space – at no cost to the tax-payer and at significantly reduced risk to lenders.
“Now, a year later, we are delighted to welcome Britain’s biggest building society as the first major lender to go live with the house builder-owned scheme, massively extending its reach to help low-deposit buyers right across England, Scotland and Wales realise their dream of home ownership. Deposit Unlock demonstrates cross-industry collaboration at its best, with house builders, lenders and the insurance industry coming together for the common good.”