First-time buyers are to be encouraged to save up for a deposit through a new scheme launched today.
Clydesdale and Yorkshire Banks are launching a new savings account, Regular Home Saver, which provides a monthly saving facility, with the flexibility to vary payments during the term.
While savers will not be attracted by the interest rate of just 0.5% (0.4% after tax) or the 40-day withdrawal period, the chief incentive is a cashback of up to £1,000 if borrowers take out a Clydesdale or Yorkshire Bank FTB mortgage. The 40-day notice period will be waived if one of the bank’s FTB loans is taken out.
The bank offers FTB loans at up to 95%.
The average UK FTB property costs £121,717, so a 5% deposit would be £6,085. Saving £200 a month for two and a half years would achieve this target.
The account requires a minimum monthly deposit of £200, and the minimum required to open and maintain the account is £200. Payments can be increased or decreased provided the minimum monthly deposit is maintained.
Interest rate will pay and track Bank of England Base Rate (currently just 0.5%).
Customers saving a deposit of at least 5% and taking a Clydesdale or Yorkshire Bank FTB mortgage will be eligible for £500 cashback, while those saving a deposit of at least 10% and taking a Clydesdale or Yorkshire Bank FTB mortgage will be eligible for £1,000 cashback.
Steve Reid, retail director for Clydesdale Bank, said: “What we understand from speaking to first-time buyers is that with interest rates as low as they have been, they don’t always see the value of saving.
“Regular Home Saver is straightforward and offers very real rewards for getting in to the savings habit and building a deposit: the more deposit you save, the bigger the reward.
“By providing very clear, tangible rewards for saving towards a deposit on a home, Clydesdale and Yorkshire Banks believe that they can help re-establish some of the link between saving and borrowing.”
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Comments
@HD
Is that nominal prices?
If nominal prices stay static, real prices, adjusted for inflation, are falling by over 5% per year.
Chalky: Every area is different, prices in our area are at 2006 prices, have been for over a year and doesn't show any signs of changing here.
@Non-Agent
Steal? That's a bit melodramatic isn't it? I'd rather just wait. Real prices, adjusted for inflation, now back at 2003 levels and still falling.
Why don't all of you moaners buy your parent's property for the 'true value' that you desire and crave? Would you want them to sell up at 50% of its current value? Nope, but you sure as hell would want to steal from a stranger.
On the other hand, please slash prices to ridiculous lows - I'll buy a second house to let.
This attitude of blaming everyone else is ridiculous - you can't afford what you 'want' and it's not your fault. Get real.
Greedy , ill-informed and Short sighted.
Rantrave: To be fair many my ask why you post here. You have openly admitted that you wont be buying anytime soon.
So why do you enjoy lurking around what is prodaminately an Estate Agentcy Forum?
I do wish things wouldn't get too personal. Sometimes the written word isn't read as intended either by author or recipient and sometimes it is. If one doesn't agree fine, but no-one is obliged to make a reply from either side. If one doesn't like the answer maybe a reply post should be viewed as being constructive, than personal attack. That way one can move forward, dosen't alienate and save time wading through the chaff?
Aye Johnny - many of Ray's posts read like the letters page in a tabloid. I'm not sure why he posts here - once others point out the flaws in his arguments, he says he's not going to discuss them any further! I thought the whole point of a forum like this was to discuss things???
Aye Johnny - many of Ray's posts read like the letters page in a tabloid. I'm not sure why he posts here - once others point out the flaws in his arguments, he says he's not going to discuss them any further! I thought the whole point of a forum like this was to discuss things???
Ray Evans clearly doesn't know what he's talking about.
"Most grandparents both worked full time for 25 years to pay off the mortgage - but the wife didn't"
It's like that line from the film Anchorman where the guy is taking about his aftershave, sex panther:
"60% of the time, it works every time"
Ray - we do have different points of view and are entitled to them. It seems though that yours do not stand up to much scrutiny - once they get challenged you simply post that you are not going to comment on this thread any more, only to post similar views on another thread.
I do respect the fact that you have several decades experience in the buying and selling of houses. However, I wonder how many times you have seen a run on a British bank, house prices triple in a decade and interest rates reduced to a 300 year low. If you need to check, I can answer that for you - once in each case and all in the last five years. That alone points out that what is happening in the property market now is different from what you have ever experienced before.
Personally, I think it would be beneficial for you to take these facts on board, rather than rolling out the 'young people today don't know how to save' stereotype.
When you bought your first house, how many salary multiples did that involve - up to seven or eight times? Did your partner have to work full time for 25 years to meet the payments. In both cases, I suspect the answer is not. Does this make you qualified to continually bash young people over the head with your years of experience?
@rantnrave
For goodness sake read my posts fully!
You have your views and I have mine, I do not intend to carry on a discussion with you on this matter any longer.
Ray - I'm fascinated that you think a credit fuelled boom that saw house prices triple in a decade and brought the global economy to the brink of collapse is part of a normal cycle!
Interesting to see on another thread you are advocating mortgages today being based on both partners working full time and yet here admit that wasn't necessary to buy a house in the past. Rather inconsistent to say the least.
'@rantnrave.
Most of them.
Although the wife not full time for all of the time. You don't know very much do you. Property prices seem to go in approx. 10 year cycles - we happen to be in the middle of one downturn. Get over it.
Ray - I wonder how many grandparents will say both the husband and wife had to work full time for 25 years to pay off the mortgage?
@Mike Wilson
Neil is so right.
In the past people had the same problems as today, just different figures, including incomes. Ask some of them.
Why is it that 20 somethings think they deserve - as of right - everything at once. Including new cars, long hollidays, drinks every night at £3-£4 a pint and wine at £4.50 for 175m, iphones, to name just some? Decide what you want and priorities for a few years, not all but much of it comes down to choice. Ask parents and grandparents what they had to do.
Plenty of folk get just 0.5% if they don't chek their rates, many BS offer just that. The £1k back on that basis is not bad!!
@wooden top
Yes at 6.99% when base rate is 0.5%. If FTB's think that is a good deal then mental illness is their problem not saving a deposit.
At least they are offering 95% LTV which is one of the biggest stumbling blocks for FTB with other lenders.
Interestingly today it was announced that those good old endowments now maturing after 25 years are paying less than a normal savings account. Criminal!
What a crock of youknowwhat; thanks Clydesdale & Yorkshire but i'll give your attractive interest rates a swift miss and instead negotiate a few grand off the purchasing price.
Besides which, it doesn't even touch upon what mortgage products they offer; presumably usurious IRs and arrangement fees.
Is this a joke? 0.5% is a truely terrible interest rate.
I get RPI + 1% tax free with NS&I, 8% with First Direct Regular Saver, 5% and rises in line with base rate with Santander First Home Saver. Hell, Lloyds even pay 4% on a bog standard current account balance. Moreover, the interest is simply paid rather than being tied up in some dodgy cashback deal linked to taking out one of their products.
Unfortunately, the house market is exactly that. A market. A house is worth what someone is prepared to pay for it, and what they can pay is what they can afford to borrow. Let us remember that no one has the right to own a property and also, in this new age that we are living, people will have to learn to go without in order to save a deposit, that may mean not having the latest smartphone or newest car for a few years!
It will probably take 5 to 10 years for the housing market to get back to a fast market, but is a fast market what the housing market should be in the first place?
"The average UK FTB property costs £121,717"
Which is twice as much as it needs to be for a sustainable property market.
If the average FTB property is £121k - the average family property (3 bed semi) is getting on for £200k.
For someone starting out today - with no equity yet and interest rates at a 300 year low - to take on an 8 times average salary mortgage to afford an average family house is suicidal.
In my area a 3 bed semi is about £275k - 300k. If my 21 year old son ever aspires to own a 3 bed semi in the local area then, without help from the bank of mum and dad, one day, assuming no property price inflation, he'll need a mortgage of about £275k. Wow, and that's with the BOE base rate at its lowest ever! What will happen if mortgage rates go back to say 8% in a few years? To have a chance of owning a 3 bed semi and have a family, he'll need to be earning 70k - 80k a year.
So, only high earners will be able to afford a 3 bed semi! Who is going to buy all the detached houses?
When I was a kid the 3 bed semis in my home town were occupied by people who worked as carpenters, draughtsmen, railway workers, airport workers (all dads of childhood friends who lived in 3 bed semis) - now you'll need to be in the top 10% or earners to afford one.
This is, of course, not sustainable and we are in for a long period of price stagnation and price falls to get the housing market back into line with wages/affordability.
Still, if only more lenders would lend 100% 8x salary mortgages eh?