When it was announced that the newly nationalised Northern Rock would resume lending with permission to lend as much as 90% on mortgages, many assumed they would specifically target first time buyers.
Not so says Gary Hoffman, chief executive of Northern Rock in an article for the Financial Times, he said: “We hope to do some first-time buyer lending but it is not going to be targeted at first-time buyers.”
This will surprise some as having been assured that Northern Rock was going to be filling the gap left by the withdrawal of foreign lenders and stimulating the market, many thought this would revitalise the first time buyer market.
Hoffman, however, is keen to stress that the bank is likely to mainly be lending to people with a 20% deposit.
Melanie Bien, director of London-based mortgage adviser Savills Private Finance, hopes that the bank will start to offer the 90% mortgages as she thinks it will be necessary to entice first time buyers into the market.
She said: “There is a realisation certainly from the government now that to get first-time buyers back in the market you are going to have to offer something more than 75 per cent loan-to-value.
“There is obviously risk involved and that is why there is a premium to pay but there is no other way around it. If you ask first-time buyers to put down a 25 per cent deposit they are just not going to be able to do it”
It will be interesting to see what ends up happening there at Northern Rock, though there is a strong suspicion that given the circumstances it will strongly reflect what the government wants.
