Santander, Barclays, HSBC and NatWest were among those who have this week launched products for borrowers with a 5% deposit under the government initiative, which launches today.
At the same time, Yorkshire Building Society announced it was to become the latest lender to release a 95% LTV offering which is separate to the government scheme.
Yorkshire said its new deal would be a five-year fixed rate of 3.99% and would come with a £995 fee and free standard valuation. However, it’s only available to borrowers with advice from one of the society’s mortgage advisers and isn’t permitted on flats or new build homes.
It follows hot on the heels of Leeds Building Society and Atom Bank which also unveiled 95% LTV mortgages last week which were not part of the mortgage guarantee scheme.
And it comes as Accord Mortgages, which is the intermediary-only lending arm of Yorkshire Building Society, revealed on Friday it would be extending its 95% LTV offering to borrowers who were moving house. It became the first lender to move into the 5% deposit lending space last month with deals for first-time buyers.
Mortgage guarantee scheme – what lenders are offering
NatWest said it would be offering its 95% LTV deals to both employed and self-employed customers, with the mortgages being offered, initially, through its direct channel with intermediaries being able to access the deals in due course.
It will have a two-year fixed rate at 3.90% and a five year fixed rate at 4.04% – no product fees apply to either deal.
Santander said customers can apply for its two-year tracker (3.99%), three-year fixed rate (3.99%) and five-year fix (4.09%) directly or via a broker. All it’s 95% deals come with zero product fees and free valuation. It will not lend to customers purchasing new builds.
Barclays, meanwhile, confirmed its products would consist of a 3.99% two-year fixed rate and a 4.09% five-year fixed rate. Both had zero fees and were not available on new builds.
HSBC is offering a two-year fixed rate deal at 3.99% with a £999 fee or borrowers can pay 4.29% and benefit from the lender’s ‘feesaver’.
A similar offer applies to the five-year offering which has a 4.29% rate for borrowers paying a £999 fee or a 4.49% rate on the feesaver.
Michelle Andrews, HSBC UK’s head of buying a home said: “After such a turbulent year it is great that this scheme will make a real difference in enabling first-time buyers who didn’t think they would have a chance of getting a mortgage and home movers to get the keys to their new home.”
Interest rates
The response to the launch of the scheme has been positive, with many industry commentators welcoming an initiative to help more people get onto or up the property ladder.
However, many were warning potential borrowers they must still pass affordability checks and others were urging buyers to watch out for the rates.
Indeed, Ross Boyd, CEO of mortgage switching platform, Dashly, said: “While today’s announcement will undoubtedly be welcome news for generation rent, especially as UK house prices have risen to record levels, buyers should be aware of the interest rates attached to these schemes – sometimes as high as 4% – and the long-term affordability.”
His views were echoed by Iain McKenzie, CEO of The Guild of Property Professionals, who was urging buyers to shop around if they were tempted by taking out a 95% mortgage.
“Some of the rates on offer for a two-year fixed deal are 3.9% – more than 2% higher than the cheapest deals on the market,” he warned.
