Accord launches 95% LTV mortgage for first-time buyers
Accord Mortgages is launching a 95% loan-to-value (LTV) mortgage for first-time buyers tomorrow.
The lender, which is part of Yorkshire Building Society, will not be using the government’s mortgage guarantee scheme for the introduction and said the deal will be available only through brokers.
However, it said the product would not have been possible without having the government’s scheme launching as well to bring more lenders into the market.
Accord emphasised that it will monitor demand for the 95% LTV mortgages to ensure service levels were managed carefully and warned that it could be withdrawn at short notice.
The 95% LTV deal is a five-year fix at 3.99% and comes with a £995 fee and free standard valuation.
Accord said its standard underwriting policy and terms will apply, but with a maximum 4.49% loan to income ratio (LTI) “to ensure prudent affordability”.
The maximum loan size is £500,000, and flats and new build homes are not permitted.
The deal is the first 95% LTV offering from a major high street bank since the pandemic hit. Moneyfacts said it is the first available in England, Wales and Scotland not to be tied to a support scheme or regional restrictions.
Monitoring market closely
Jeremy Duncombe, managing director of Accord Mortgages, said: “Increasing house prices, the need to save for a larger deposit and limited choice in the higher LTV markets, means the goal posts have continually moved for many.
“We were one of just a handful of lenders that continued to offer 90% LTV mortgages during the pandemic and have been monitoring the market closely to ensure we carefully broaden our support to those with even smaller deposits.
“This new 95% mortgage will give brokers another option to help clients with smaller deposits realise their home ownership ambitions.”
He added that, being the first major lender to launch, it was important to balance demand with being able to offer the high levels of service brokers and clients expect.
“As such, this product may be withdrawn at relatively short notice, but we will continue to communicate our intentions proactively wherever possible,” he said.
“However, as more lenders join us in the 95% LTV mortgage market, either with or without the mortgage guarantee scheme, we’re hopeful buyers with just a 5% deposit will be able to benefit from a more sustained offering in the market.”
Yorkshire Building Society chief executive Mike Regnier told The Guardian there were more than 200 underwriters ready to service the demand.
The re-entry is likely to be welcomed by mortgage brokers who have been short of options to support borrowers with smaller deposits.
Reacting to the government’s scheme launch earlier this month, brokers said they were pleased it would bring more lenders into the market.
“This initiative is very welcome at a time when the availability of high LTV mortgage products is at an all-time low, and it should hopefully assist more buyers onto the ladder,” said Sharon Duckworth, director at Key Mortgage Advice.