LONDON (Reuters) - State-backed Royal Bank of Scotland (RBS.L) has agreed in principle mortgages with 1,080 customers since Britain’s flagship ‘Help to Buy’ housing stimulus program was launched a month ago.
Britain’s Conservative government is pushing the plan, with a 2015 election in mind, as a way to help people move onto, or up, the property ladder, and stimulate growth after three years of economic stagnation.
RBS, which owns NatWest, said 73 percent of the mortgages were for first-time buyers. If all of the applications are approved, the bank will be lending 171.6 million pounds ($274.5 million) under the scheme.
It said the average amount its customers wanted to borrow was 159,000 pounds and the average price of the home they wanted to buy was 167,565 pounds.
“These are majority young first-time buyers who, without ‘Help to Buy’, wouldn’t have been able to consider a mortgage or buy a home,” said Lloyd Cochrane, head of mortgages at NatWest and RBS.
Meanwhile Halifax, owned by RBS’s part-nationalized rival Lloyds Banking Group (LLOY.L), said it had received 1,309 mortgage applications from home buyers across the UK who have found a property to purchase. Halifax said the applications were for mortgages worth a total of 194 million pounds.
Critics say that unless the three-year scheme is properly scrutinized it could drive up house prices in sought-after areas like London and create a housing bubble that might burst when interest rates start to rise later this decade.
RBS is allowing customers to draw down the funds before the scheme officially launches in January and said 5 customers had already purchased new homes through the scheme. ($1 = 0.6252 British pounds) (Reporting by Matt Scuffham; Editing by Sophie Walker)