Is the Bovis Homes and Barclays tie-up the way ahead?
Yesterday's announcement that housebuilder Bovis Homes has agreed a joint venture with Barclays which will see home buyers guaranteed a mortgage of up to 90% has set tongues wagging in the housebuilding arena. So is this the way ahead for the UK housebuilding sector?
The structure of the deal between Bovis Homes and Barclays is such that Bovis Homes will put aside an agreed percentage of any profits on house sales as an insurance against potential mortgage problems in the future. In effect this pool of income will cover any potential losses for Barclays Bank on mortgage agreements although it will also encourage buyers to enter the housing market. But is this dangerous for Bovis Homes?
On the surface there is a risk in guaranteeing any mortgages issued to house buyers but then again we do not as yet know the level of income which would be required to back up any mortgage agreement. When you also consider that more house buyers will be encouraged to enter the market this could help to steady the UK property sector and ultimately reduce the risk to Bovis Homes as the sector stabilises and hopefully begins to grow.
Share this..
Related stories
Fixed Rate Mortgages Increased Yet Again
As the doom and gloom in the property sector continues to build up it has been announced that the cost of fixed rate mortgages has risen yet again. While it is something which the big banks have managed to keep out of the popular press, Chase De Vere has released a research note which shows that at least 14 mortgage providers have increased the cost of their fixed rate mortgages over the last two...
Read MoreBanks offering Help to Buy ISAs named
27/07/2015 Some of the banks and building societies that will be providing the governments Help to Buy ISA have been named. They are: • Barclays • Lloyds Banking Group • Nationwide • NatWest • Santander • Virgin Money Each of these banks has confirmed that they will be offering the help to buy ISA from December 2015, which was created by the government to help first t...
Read MoreUK mortgage approvals down over 70% year-on-year
The Bank of England has revealed a serious 72% drop in mortgage approvals when comparing October 2007 against October 2008. The exact number of mortgage approvals in October was 32,000 which was a fall of 1,000 from September to a level not seen since 1993 when records began. When compared to the 88,000 mortgages approved last October and 114,000 in May 2007 the figures literally speak of themselv...
Read MoreFirst time buyers up 45pc year-on-year
06/09/2013 The amount of people buying a first home in the UK has risen by 45pc year-on-year from July 2012, according to a report by LSL Property Services. There were a total of 26,100 transactions for buyers of first homes in July, up 8,100 from July 2012, and the highest monthly total since November 2007. First time buyers are being encouraged to buy a home due to the availability of chea...
Read MoreIs the government right to reduce interest on the support for mortgage interest scheme?
Today is D-Day for many people in the UK who have lost their jobs and are fighting to retain their homes, with the UK government slashing its share of interest paid on mortgages from 6.08% to the market average of just 3.63%. This is a controversial move designed to save the UK government billions of pounds and reduce the budget deficit. However, as you might expect the scheme has attracted more t...
Read More