PMS and Sesame call for higher LTV mortgages to replace HTB

Michael Lloyd

September 12, 2019

PMS Mortgage Club and Sesame Network have urged lenders to increase LTVs on new build mortgages to bridge the gap when the help to buy scheme is withdrawn.

The scheme is restricted to first-time buyers in 2021 and is set to end completely in 2023.

PMS and Sesame have also called for more lenders to embrace Modern Methods of Construction (MMC) in order to help the UK meet its house building target.

Stacey Wood, national new build relationship manager for Sesame and PMS, said: “Since the launch of help to buy in 2013, the 20% interest-free equity loan offered as part of the scheme has supported more than 210,000 property purchases – 81% of them to first time buyers.

“However, with help to buy scheduled to be removed completely in 2023, we urgently need to look at ways for customers to still afford a new home.

“The average purchase price for a first-time buyer using the help to buy scheme on a new build property in 2019 Q1 was £294,920.

“With only a small number of lenders operating above 85% LTV on new build, this could mean customers having the challenge of raising a deposit of over £44,000 post help to buy.

“The solution therefore has to be more lenders increasing their LTVs on new build properties, which the industry needs to start planning for sooner rather than later.”

An analysis of 100 lenders undertaken by PMS and Sesame found that only 10 offer 95% LTV mortgages on new build houses.

Wood added: “We have recently seen some improvements from lenders on higher LTVs, which is a step in the right direction, but much of this has come from specialist lenders and small regional building societies, so there is much to be done in terms of mobilising the broader market into action on this important issue.”

Jane Benjamin, director of mortgages at Sesame and PMS, commented: “We are in constant dialogue with lenders as they shape their future strategies and propositions for customers.

“New build is an important part of this agenda, particularly as 85% of this market is advised, and we are also in touch with government bodies and builders in the pursuit of long-term solutions that will enable the new build market to thrive.

“More lenders embracing MMC is another part of the long-term solution and it’s something else we are raising in our discussions.

“With the government continuing to fall short of its target of building 300,000 homes a year, MMC could enable new properties to be constructed quickly and efficiently.

“Progress is being made, with some lenders now considering MMC based on approved contractors, warranties and satisfactory valuations, but more innovation is needed if we are to meet the needs of future customers.”

New build, help to buy and MMC are all topics that will be on the agenda at the latest round of PMS and Sesame Mortgage Extra Live adviser events, which are taking place across the UK throughout September.

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