You are here: Home - Mortgages - First Time Buyer - News -

First-time buyer deals rise but Nationwide’s deposit rules reflect lender caution

0
Written by: Samantha Partington
03/08/2020
First-time buyers now have close to 30 deals to choose from at 90 per cent loan to value (LTV) but Nationwide’s recent deposit restrictions reflect a new cautious approach by lenders.

Nationwide re-joined stalwart lenders such as HSBC to offer 90 per cent deals last month, exclusively for first-time buyers, with an additional condition.

Buyers will need to prove that at least 75 per cent of their deposit has come from their own savings, ruling out deposits that have been gifted entirely from parents.

If the source of the deposit is an inheritance it will be counted as coming from the borrower’s own savings.

A Nationwide spokesperson said: “Nationwide is currently the only major high street provider to return to 90 per cent lending for first-time buyers without any volume restrictions.

“These are difficult times for those looking for their first home and affordability must be placed at the forefront of any decision.

“As we outlined at the time, we will accept gifted deposits up to 25 per cent of the total value, however, we ask that the majority comes from the mortgage applicant as it demonstrates that someone is able to save and manage their finances.

“Above all we need to continue to lend responsibly as we consider how we can help people move home at this uncertain time.”

More deals coming

There are now 28 fixed rate deals available to buyers with a 10 per cent deposit, according to analysis by ratings service Defaqto.

Since chancellor Rishi Sunak delivered his summer statement on 8 July, ten fixed deals have been launched. However, small building societies such as Furness and Penrith restrict their high LTV lending to their local areas.

HSBC, which has maintained its decision to support high LTV lending throughout the pandemic, has put in place daily lending limits to control volumes.

Sunak’s stamp duty holiday, also revealed in his summer economic plan, will help first-time buyers living in areas of the country with expensive housing, but it has also created more competition for the traditional starter home.

Buy-to-let investors will benefit from the stamp duty break but will continue to pay the three per cent stamp duty surcharge.

Katie Brain, insight analyst for banking at Defaqto, said: “It can be really hard to save for a deposit for a home and high LTV mortgages are often the only way a first-time buyer can get on the ladder.

“The stamp duty holiday may help first-time buyers but without the finance, home-ownership will be out of reach for most.

“It is encouraging to see lenders returning to the market and new products coming out for those with small deposits. We are seeing many come onto the market for only a few days and so borrowers will need to act quickly to secure these deals.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week