CC License License 401(K) 2013
The government launched the Help to Buy program last September. This program is dedicated to helping customers buy new properties in the coming years. Many banks feel that this could be a great program to bring in new customers. Santender announced that it will be participating late last week.
Santender customers that choose to participate in the new program will be able to get mortgages for a 5% deposit. The government will provide equity loans worth up to 20% of the property value.
Santender currently only offers mortgages to customers who are able to pay a 10% deposit. They have found that some customers can’t afford the same deposits and would like to reach them. The bank said that it expects to provide more loans to customers in the first three months of this year.
The Help to Buy program is a great way to help reach more customers. However, they said that they will only offer these new loans to customers who are buying properties with a higher loan to value ratio. They want to be able to sell the properties at a reasonable rate to recoup their investment if customers default on the loans. Customers that can’t afford large down payments tend to be more likely to end up underwater down the road.
Santender executives believe that the new Help to Buy program will be very helpful for the bank’s bottom line. Miguel Sard, the head of Santender’s mortgage division, said that the program has already helped them draw more high credit customers. Sard and other executives believe that more first-time homebuyers and property owners are going to participate in the future. This can help boost the banks profitability as it struggles from a weak economy and a growing number of customers filing PPI claims.
The housing market has been stagnant for the past several years. Sard and his colleagues feel that this is a good program to help stimulate it. However, some experts are worried that it will lead to new problems. They warn that the program could create a serious housing bubble similar to the one that led to the Great Recession in the United States. Other experts have dismissed those concerns and stated that there is no evidence to suggest that the Help to Buy program is causing a housing bubble.
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