Save to Buy shows barriers to home ownership can be overcome

18,000 savings accounts opened and more than 220 early bird Save to Buy customers already in a home

29 May 2012

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.

Notes to editors

The Save to Buy scheme was launched in May 2011. It is an account for first-time buyers to save regularly towards their deposit that also enables them to apply for a Nationwide mortgage with a lower deposit of 5% (95% LTV). Save to Buy ISA was launched in February 2012 to enable first time buyers to make the most of their tax free savings allowance.

The savings element

Save to Buy offers first-time buyers a regular savings account paying a competitive rate of 2.5% gross p.a./AER variable on balances up to £20,000. The account can be opened with just £50 and customers have to save at least £50 per month, plus customers have the flexibility of not paying the minimum monthly amount for up to three months during a rolling 12-month period.

If the first-time buyer goes on to take out a Nationwide 95% LTV mortgage, there is also an attractive cash-back reward of up to £1,000; the more they save, the more cash-back they receive.

Amount saved Cash-back reward
£2,500 - £4,999 £250
£5,000 - £9,999 £500
£10,000+ £1,000

The mortgage element

For first-time buyers to be eligible to apply for a Nationwide 95% LTV deposit mortgage, they must have been saving in a Save to Buy savings account for between six months and three years. They will then be eligible to apply for competitive mortgages of up to 95% LTV that were previously exclusively available to existing customers moving home.

In addition, as first-time buyers, Save to Buy customers will also qualify for any Nationwide first-time buyer deals available at the time, for example the current Nationwide offer is a £500 discount off the product fee. Combined with Nationwide's new 50% product fee discount, fees for first time buyers on 5 year fixed rates are currently just £200.

To help first-time buyers with their savings goal, the Society can also provide an affordability check to provide potential borrowers with more information on the amount they may be able to borrow, as well as help answer general questions relating to the mortgage process.

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