Return of low-deposit mortgages

Several major UK lenders have announced the return of low-deposit mortgages to help those with only small savings onto the property ladder. Both Nationwide Building Society and Santander Bank have launched products with an LTV of 95%. The last few years has generally seen Help to Buy fill the gap for those with only 5% deposits, but now lenders are looking to go it alone and lend the full 95% themselves.

For Nationwide, this is the first time they have offered loans with a 5% deposit since 2008. Their Head of Mortgages, Henry Jordan, said that their move “significantly increases [their] lending in the first-time buyer market”. Santander highlighted that the Help to Buy: Mortgage Guarantee scheme is due to end in 2016, which has prompted their move to extend high LTV lending without government support.

A healthier market overall means many lenders are at least considering meeting the demand for low deposit mortgages. Before Help to Buy, it was rare to need a deposit of less than 10%, which is currently upwards of £26,000 based on average house prices. The rates on the 95% mortgages may not be “market-leading”, but Nationwide are offering an additional £500 cashback to prospective buyers at completion. This would need to be weighed up by consumers against the higher servicing costs compared to other fixed rate products

If you would like to discuss a first time buyer mortgage with one of our Mortgage Brokers in Poole or Mortgage Brokers Bournemouth then give us a call on 01202 937 444