* 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 (Reuters) - 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 losses.
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 Economics.