Lloyds Banking Group will launch a new £5k deposit mortgage aimed at first-time buyers struggling to find a fuller deposit, while buy-to-let specialist lender Fleet Mortgages has reintroduced zero-fee and fixed-fee, five-year fixed-rate mortgages.
The new Lloyds deal is equivalent to a 98% maximum LTV and will be available via brokers, as well as directly through Lloyds and Halifax. It will be fixed at 5.89% for five years and is available for purchases of up to £300k. There are no product fees, but the deposit must be the homebuyer’s own, rather than gifted.
Committing to first-time buyers
Rachel Geddes, strategic lender relationship director at the Mortgage Advice Bureau, said it was encouraging to see a major high street lender making such a significant commitment to supporting first-time buyers.
“Unlocking up to £500m in additional lending, alongside a £5,000 deposit option, is a positive step towards breaking down some of the barriers preventing aspiring homeowners from getting onto the property ladder,” she said.
It follows MAB research showing that 73% of prospective buyers are unaware 5% deposit mortgages exist while 39% believe they need at least a 10% deposit.
“Greater visibility and availability of low deposit options will play a key role in helping more renters buy with confidence, while reinforcing the value of speaking to a mortgage adviser to fully understand the support and products available,” she said.
David Hollingworth, associate director at L&C Mortgages, also said the new Lloyds offer was encouraging. “High rents can make it a slog to reach the minimum 5% deposit that most mortgages demand and the Bank of Mum and Dad isn’t an option for everyone.”
However, he warned it may not suit all. “It won’t necessarily work for everyone and doesn’t combine with the higher lending multiples that lenders can now offer. The purchase price cap of £300k is at a level that may dent eligibility in regions where prices are highest and those able to scrape a bigger deposit together will open up cheaper rates.”
Meanwhile, Fleet’s reintroduced 75% LTV products include a 5.89% rate for the zero-fee option or 5.59% for the fixed £3,999 fee option and are available across both Fleet Mortgages’ standard and limited company product ranges for purchase or remortgage.
Both products offer a £25,001 minimum loan amount, with a maximum loan size of £750k for the fixed-fee mortgage.
Offering further choice
Steve Cox, chief commercial officer at Fleet Mortgages, said: “By reintroducing these product options, we can offer advisers and their landlord clients further choice depending on how they want to structure their borrowing. “Some will want to keep upfront costs as low as possible, particularly in the current environment, while others will be focused on securing a lower rate over the fixed term, even if that means paying a higher fee at the outset.”
