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(Alliance News) - More lenders are launching 5% deposit mortgages onto the market in a further boost to first-time buyers.
New deals announced by Metro Bank and Cambridge Building Society are not part of a new UK government-backed mortgage guarantee scheme which was launched this week to increase the availability of 5% deposit loans.
Major lenders including Halifax, HSBC UK, Barclays PLC, NatWest and Santander are taking part in that scheme and unveiled new 5% deposit products earlier this week.
Cambridge Building Society said on Thursday that, from May 5, it will launch deals including a two-year fixed-rate mortgage at 4.0% with a GBP199 application fee and a five-year fixed-rate mortgage at 4.1% with the same fee. The maximum loan for this range is GBP400,000.
Metro Bank is now offering a five-year fixed-rate deal at 3.9% for borrowers looking to get on the housing ladder with a 5% deposit.
The maximum loan size available is GBP570,000.
The bank said it had already been developing its new mortgage when the government mortgage guarantee scheme was announced in the recent budget.
Metro Bank launched into near prime residential mortgages in March, offering flexibility for borrowers who may be struggling to get a mortgage elsewhere.
Charles Morley, director of mortgage distribution at Metro Bank, said: "As one of the only lenders to consistently remain in the higher LTV market throughout the coronavirus pandemic, we've been working hard to launch into 95% LTV residential mortgages.
"Our customers will benefit from a competitive five-year fixed-rate. We've also been making a number of new hires across our mortgages business recently, offering specialist lending expertise as we look to appeal to an ever wider range of mortgage customer."
The number of low deposit mortgages generally available fell dramatically in the early days of the coronavirus crisis as lenders became more concerned about riskier loans and the possibility of house prices falling.
Under the new government scheme, lenders can purchase a government guarantee that would compensate them for a portion of their losses in the event of a repossession.
It mirrors a previous Help to Buy mortgage guarantee scheme, which was launched in 2013 in response to a similar shortage of low-deposit mortgages following the 2008 financial crisis.
source: PA
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