With much hype surrounding the early launch of the Help to Buy scheme, which the government promised would give the right to buy back to young Britons who have been locked out of the market, prospective buyers have eagerly awaited further details of the scheme.
However, last week, RBS-NatWest, became the first to reveal pricing of its Help to Buy mortgages, offering a 2-year fixed rate deal at 4.99% with no fees.
Halifax has since followed with a lesser deal of 2-year fixed rate priced at 5.19% with a £999 fee.
Brendan Cox, managing director of Waterfords estate agents, said he thinks the fees are ridiculous and are making a mockery of the whole scheme.
He said “There has been a hugely positive reaction to Help to Buy in the weeks leading up to its launch, which has got many people excited at the prospect of making a move.
“Now however, in what I believe puts the government in a very embarrassing position, people are being told they can buy through the scheme, but will have to pay nearly twice the interest rates of anyone else.”
It has also been revealed that some lenders are offering better rates and fees on 95% mortgages outside of the scheme.
Cox said: “It is scandalous and one of two things will happen: The scheme, which has been largely publicised, will fall flat and never actually get off the ground, or, people will go with it, because they have no other option, and will later find they cannot afford the repayments, which will result in a substantial rise in repossessions.
“We are supposed to be helping buyers not setting them up to fail and I can see no logical reason as to why lenders are imposing such high rates when there is no greater risk to them.
“I would call on all those lenders within the scheme to explain the reasoning behind their rates, so that buyers can understand exactly why they are paying such a high price.”
