* Most major mortgage lenders now signed up to "Help to Buy"
* Mortgage rates under scheme still relatively expensive
* Participation concentrated in narrow 90-95 pct LTV band
LONDON, Oct 11 All but one of Britain's major
lenders have signed up to the government's "Help to Buy"
mortgage guarantee scheme after Barclays Plc said on
Friday it would join the programme.
Barclays said it was still working on the details of when it
will launch offers under the scheme, and what types of loans
will be covered.
Britain's mortgage guarantee plan, launched earlier this
week, is designed to help people get on the property ladder with
as little as a 5 percent deposit.
The government hopes it will boost construction and the
broader economy, as well as prove popular with the public before
an election in 2015. Critics say it will do little more than
raise prices, putting first-time homebuyers in an even trickier
position and fuelling another housing bubble as the economy
picks up speed
Annual house price inflation in Britain is running at more
than 6 percent, according to the Halifax index, with parts of
London seeing double-digit gains.
The government is willing to put 12 billion pounds of
taxpayers' money on the line, potentially supporting 130 billion
pounds on new mortgage lending. But take-up may be far lower,
particularly if the rates on offer - currently around 5 percent
- don't come down.
RBS, Lloyds, HSBC and Santander UK
are all already signed up for the scheme which, in
exchange for a fee, will give banks greater protection against
Customer owned Nationwide, one of the few lenders
already offering mortgages to buyers with small deposits, is the
only big lender yet to commit.
Under the scheme, lenders can choose to participate in three
loan-to-value bands, but must then put all eligible loans they
originate into the scheme. Most interest so far has been in the
most risky 90-95 percent loan-to-value band.
In addition, buyers have to pass strict affordability and
stress tests, meaning many applicants may be turned down.
"We are still doubtful that the Help to Buy mortgage
guarantee will unleash a stampede of new housing demand and a
new house price boom," said Matthew Pointon at Capital