LBG’s £6.5bn FTB commitment
LBG expects the pledge to help around 60,000 people buy their first home by the end of 2013, delivered through one of the most comprehensive product propositions in the UK mortgage market.
Stephen Noakes, mortgage director at Lloyds Banking Group, said: “Our range of products is continuing to make home ownership a reality for so many first time buyers. Through our unrivalled commitment to affordable housing and new build schemes through Halifax, and innovative products such as Lloyds TSB’s Lend a Hand, we’re offering real solutions for those with smaller deposits.
“The recovery in the housing market rests on growth in the wider economy. Whilst the property market is likely to continue to be challenging, we remain committed to getting things right at the start of the chain, creating liquidity in the housing market and helping more people get on to the property ladder in 2013.”
Ben Thompson, managing director of Legal & General Mortgage Club, said: “This announcement is more good news for first time buyers, and follows on from Barclays’ recent announcement of its Family Springboard Scheme. This impressive sum has been in part subsidised by the Government’s Funding for Lending Scheme (FLS), from which Lloyds Banking Group has so far drawn £3bn.
“Whilst this is no doubt good news for First Time Buyers, the real winners still remain the fortunate few who fall into the ‘low risk’ category of lending.
“Following the launch of the FLS, the cost of funds has reduced drastically, resulting in fierce competition among lenders to attract these ideal borrowers. However, there is a large market of first time buyers who remain underserviced, with low risk lending becoming increasingly commoditised and overcrowded.
“As a result of this, at some point there will need to be a shift in lending criteria, with banks and building societies moving up the risk curve and offering higher Loan to Values (LTVs), in order to maintain profit margins.
“Having said that, this move from Lloyds Banking Group is definitely a welcome step. What we now need to see is other lenders following in its footsteps and launching other innovative ideas to ensure the market can continue to grow and to allow more buyers to finally get onto the ladder.”
Currently one in three mortgages on affordable housing schemes are provided by Halifax, including shared ownership and shared equity while a third of all lending on UK new build properties is funded by LBG.
Halifax provides more than 40% of funding for the NewBuy scheme, working alongside 42 housebuilders, more than any other lender and Bank of Scotland has launched a range of products for customers on the MI New Homes scheme.
In 2012 Lloyds Banking Group committed to lending £5 billion to support 50,000 first time buyers. At September 2012, the Group had helped 40,000 customers, the equivalent of one in four first time buyers, to purchase their first home.