It’s not been an easy year for first-time buyers, but things are starting to improve. Here’s what we know about the forthcoming 95 per cent mortgage scheme and why lenders are starting to bring back higher loan-to-value mortgages.

For anyone trying to buy a property without a sizeable deposit, getting on the property ladder has been a struggle recently. This past year has been especially challenging for first-time buyers and buyers with smaller deposits. Many lenders withdrew 90 per cent mortgages during the height of the pandemic to cope with high demand. Although many have now resumed lending to those with a 10 per cent deposit, options for those with less have been in short supply.

However, there was some good news relayed during the March 2021 budget regarding mortgage loans. A new government-backed scheme offering 95 per cent mortgages will start in early April. The scheme will be available to all home buyers on properties up to £600,000. Big lenders including Barclays, NatWest, HSBC and Santander have agreed to take part in the scheme. Virgin Money and other lenders are expected to follow suit.

First-time buyers will benefit, but you don’t have to be a first-time buyer to use the scheme.

More lending options

The market is also opening up for buyers with smaller deposits. Lenders are starting to offer more choice to those trying to get onto the property ladder. Accord Mortgages recently announced it would offer 95 per cent mortgage loans. A spokesman for the lender said: ‘The time is right for us to come back into the market at this point’.

Accord’s new 95 per cent mortgage loan is a five-year fixed rate deal only available to first-time buyers, and only available to those buying houses and not flats. The interest rate is fixed at 3.99 per cent and the maximum loan size is £500,000. This mortgage loan is only available through brokers, so please get in touch with us if you’d like more information.

The growing confidence in the property market among lenders is good news. Last year 95 per cent mortgages were scarce when lenders feared for the market. Many were concerned that property prices would fall and there would be payment defaults. However, the market has remained robust, with property market values rising by 8.5 per cent last year.

We will keep you posted on the details of the government-backed 95 per cent mortgage scheme as details unfold.

more news