It has been announced that big lenders are now starting to offer mortgages to borrowers offering a deposit of just 5%, under the new government guarantee scheme.
This policy is aimed at aiding more first-time buyers in securing a home. Furthermore, analysts have also suggested cheaper deals are available for those able to stretch to a 10% deposit.
The scheme is said to be similar to previous policies used to boost the economy and housing market; in return it will be offering support to those buying a property for the first time.
The guarantee has been designed to give lenders confidence to offer 95% loan-to- value mortgages, many of which were withdrawn during the pandemic.
Lenders such as Lloyds, Santander, Barclays, HSBC, and NatWest are reportedly starting to offer products. However, Halifax and Barclays have said that the products will not be available for new build homes.
It has been said that some of the new mortgage rates are close to 4% for a two-year fixed rate deal. For example, rates on NatWest's new 95% mortgages will begin at 3.9%.
Head of mortgages at NatWest, Lloyd Cochran, told the BBC "It reflects the extra risk the bank is taking on. I think over the long term that is a pretty competitive rate for customers.
He also adds, "One of the things we do is ensure that the customer can afford that rate. We also ensure... the customer can afford that loan if interest rates were to rise."
Analysts have stated that rates could be cut significantly, by as much as 0.75 of a percentage point, for borrowers able to stretch to a 10% deposit.
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