The lender revealed it had released two-year fixed rate deals – a 3.80% mortgage with £499 product fee and a 3.95% product with no fee. Both will come with a free valuation up to £999.

It said the new deals, available today, would be aimed at first-time buyers and borrowers with small deposits.

Matt Bartle, director of products at Leeds Building Society, said: “We recently returned to 95% LTV lending and are now extending our range to offer short-term fixed rate mortgages, improving the choice for borrowers and helping more people achieve their dream of owning their own home.”

He added: “It’s important to us to assist those buyers who are not well served by the wider market, including those with smaller deposits, to allow more people to have the home they want.”

“We keep our products, rates and lending criteria under constant review to ensure we can continue to offer mortgages to meet the needs of customers who are looking to take their first step onto the property ladder.”

Mortgage guarantee scheme

It comes just a day after the major banks launched their 95% LTV products as part of the government’s mortgage guarantee scheme.

Kate Davies of the Intermediary Mortgage Lenders Association (IMLA) said the non-government 95% deals – of which Leeds’ latest offering is just one – looked set to provide potential customers with better value options.

She was also concerned the government scheme excluded applicants with any form of credit impairment and lenders who securitised loans.

“When these factors are added to the additional costs associated with the scheme, many lenders are preferring to offer their own 95% loan-to-value mortgages,” she added.

“Price will clearly be a factor – and many of the non-government-backed 95% products which have recently been launched may well represent better value for borrowers.

“There is a big role here for intermediaries to demonstrate their expert knowledge of the market and steer borrowers towards suitable and affordable products.”