Yorkshire Building Society has sliced a portion off its rate on the mortgage package it specifically designed for first-time buyers. The building society has now reduced the flagship deal to a five-year fixed rate. Loans are only up to £500,000, requiring an incredibly low minimum cash deposit of just £5,000. In this regard, the building society chopped 0.45 percent off the rate charged on its five-year fixed-rate deal as it moves to woo more prospective homeowners into its books.
It offers special deal mortgages, focusing on FTBs who require little capital upfront to buy their way into the housing market. With no arrangement fees, credit is available at a maximum of 99% LTV for houses valued at up to £500,000.
Battling to finance first-time buyers
The rate cut is made at a time of a spate of developments that have seen lenders seek to open up the possibility of owning a home to first-time buyers. Halifax has also announced rate cuts between 0.1 and 0.3 percentage points on certain fixed-rate products for home purchases, including new-build properties as well as affordable housing. The changes are available from 26 September and benefit a broad range of FTBs, including those who want to borrow more than £2 million.
However, Halifax and Nationwide Building Society have now even relaxed the rule for lending. Nationwide allows up to six times an applicant’s earnings on 95% LTV mortgages on a five or 10-year fixed-rate deal. It will extend up to 5.5 times income with some conditions. “The mortage broker Doncaster are welcoming this choice and affordability for first-time buyers.”.
Brokers across the UK have welcomed the increased competition and new products tailored for FTBs. John Charcol’s Nick Mendes summed it up as follows: “Lenders are driving competition through rate reductions and innovative products, which will likely stimulate more activity among first-time buyers, particularly those who have been waiting for the right opportunity.”. With improving rates, we expect to see an increase in FTBs looking to tie their mortgage back up before property prices potentially run off again.
SPF Private Clients Chief Executive Mark Harris echoed similar sentiments; longer-term benefits are derived from higher LTV products: “Higher LTV products, usually taken on a repayment basis, ensure borrowers erode their original debt gradually. Nationwide’s Helping Hand product is an example that enables a borrower to erode their LTV from 95% down to about 85% over five years.”
First-Time Buyers Long-Term Prospects
As lenders introduce more friendly mortgage deals and more lenient lending criteria, there is still a promise of prospects for first-time buyers from mortgage advisor Doncaster. While brokers warn them not to overextend themselves financially, they do agree that lenders must increase their support to make the housing market far more vibrant.
The dream of home ownership, more achievable for many of the United Kingdom’s first-time buyers, comes when both the Yorkshire Building Society and other large lenders take proactive steps.