Save to Buy shows barriers to home ownership can be overcome
One year on from the launch of its innovative Save to Buy scheme for first time buyers, Nationwide asserts that many of those pigeonholed as "generation rent" still aspire to buy their own home, and are working hard to achieve that aim.
Customers have opened more than 18,000 Save to Buy/Save to Buy ISA savings accounts over the last year, with more being opened at the rate of 1,500 a month. More than three quarters of those make at least one deposit every month, averaging just under £400.
It is still early days for Save to Buy. The scheme enables customers to save towards a mortgage deposit for between six months and three years - so with the first Save to Buy mortgages available from November 2011, even those who opened a savings account in the first month have only had six months eligibility to apply for a competitive 5% deposit mortgage. Despite this, during the first six months more than 220 customers have already moved into their first home, with a further 200 already reserving their new mortgage, and more hitting their savings goals every week.
Tracie Pearce, Nationwide's head of group mortgages, products & pricing commented: "Over the past year we've been impressed with the tenacity many customers have shown by making a regular saving commitment as a practical start on their journey towards home ownership. It's gratifying to see that, within a year, the scheme is already helping more than 18,000 people realise their dream of buying their own home.
At Nationwide we're keen to help more people on their journey towards home ownership - and it's practical solutions such as Save to Buy that pave the way to that transition for those that want it".
Of those customers who have already completed their mortgage, the most popular choice was a three year fixed rate at 95% LTV. Average loan size was £135,000.
Perhaps surprisingly, nearly a third of those who opened a Save to Buy/Save to Buy ISA were under 25, demonstrating the younger generation's appreciation of the need to start saving young, and their continued determination to make it onto the housing ladder. Previous research suggested that the average age of a first time buyer is 34.
Save to Buy was originally developed to tackle two mounting issues faced by first time buyers - the ability to save a big enough deposit, and the lack of availability of high LTV loans, particularly at a time when many lenders were reportedly imposing stricter lending criteria.