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Launching 5% deposit mortgages for new-build home buyers

Date published: 23 June 2021

Read time: 4 minutes

Deposit Unlock - CEO Andrew Haigh and Carl Sobolewski at Barratt development site

Newcastle Building Society has today launched a range of 5% deposit mortgages for buyers of new-build properties under an innovative mortgage scheme developed with the Home Builders Federation and its members.

Deposit Unlock aims to give small-deposit buyers more borrowing options, by allowing them to secure a new-build home up to a value of £330,000 with a deposit of just 5%.

The scheme will initially be available as a pilot on selected plots in the North East of England through four participating house builders; Barratt Developments, Bellway, Keepmoat and Vistry. As the first lender in the scheme, Newcastle Building Society has announced a range of market-leading mortgage rates under Deposit Unlock, starting at 3.50% for a two-year fixed rate mortgage. The scheme will roll out to the rest of the UK in the coming months.

Andrew Haigh, Chief Executive at Newcastle Building Society, said: “For many people home ownership can feel out of reach when a large deposit is required, so we need to do more to increase access to low-deposit mortgage products.

“In particular, people looking to buy new-build homes need new options and we recognise there is an urgent need for more homes to be built, so we’re pleased to be working with the Home Builders Federation to find an innovative solution. By being the first lender to adopt the scheme we can help increase homebuyer choice and support the supply of new homes brought to the market.”

The launch of Deposit Unlock products follows the announcement earlier this month that Newcastle Building Society is one of the first lenders to support the Government’s First Homes scheme.

Commenting, Paul Broadhead, Head of Mortgage & Housing Policy at the Building Societies Association (BSA) said:  “Deposit Unlock is a great example of a private sector initiative which addresses an important social challenge – helping people to buy their own home. This support for higher loan to value lending on new homes will be particularly helpful for younger buyers who often struggle to save for a deposit while paying rent at the same time. 

"Our research shows that raising a deposit is now the single biggest barrier to would-be buyers. Building societies are synonymous with home ownership and it is good to see Newcastle Building Society leading the way as the first lender to sign up. I am confident that more will follow.”

Stewart Baseley, Executive Chairman of the Home Builder’s Federation said: “Ensuring people can buy a new-build home is key to the industry’s ability to deliver the Government’s housing ambitions. Help to Buy has played a significant role in supporting increases in housing supply in recent years and has turned home ownership dreams into reality for hundreds of thousands of households. 

"However, with the new Help to Buy scheme now less accessible in some regional markets including many parts of northern England, and with the overall programme due to end in 2023, the industry is striving to develop a sustainable solution to help more prospective buyers onto the housing ladder.”

Steve Rance, Managing Partner of mortgage indemnity reinsurance at Gallagher Re, which administers and manages the insurance-backed scheme, said: “Right from the very start of the project, Newcastle Building Society demonstrated vision and confidence in backing the development of this innovative new scheme by the Home Builders Federation and its members. 

"With the insurance indemnities effectively funded by the house builder community, Newcastle Building Society quickly recognised this as a long-term, commercial and sustainable solution that would unlock the return of 95% loan-to-value mortgages in the new build space. And having worked closely with them during its development, we are delighted to see Newcastle Building Society now go live with their first product rates, bringing the scheme to fruition and spearheading the way for many other lenders to follow suit.”

More information can be found by speaking to participating developers, and more information about our range of mortgage products can be found here