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