Nationwide offers 90% mortgages to first-time buyers
Image copyright PA Media The Nationwide will lower the minimum deposit it requires from first-time buyers to 10% from 20 July.
The UK’s largest building society had restricted its mortgages in June in response to the coronavirus crisis.
But Henry Jordan, director of mortgages, said «we feel it is the right time to enhance our lending».
It follows the government’s announcement of a temporary stamp duty holiday for people in England and Northern Ireland.
Homebuyers will pay no stamp duty on the first £500,000 of their purchase under the tax break, which will last until 31 March.
Amid signs that the UK housing market is picking up, the Nationwide will offer an unlimited number of 90% loan-to-value mortgages to first-time buyers.
Since June, only customers with 15% deposit had been able to apply for mortgages with the firm.
So, for example, if a property costs £100,000, a new buyer would now need a £10,000 deposit rather than a £15,000 deposit.
‘Breathing life’ into the market
Henry Jordan, director of mortgages at Nationwide Building Society, said: «First-time buyers are vital to breathing life into the housing market and economy. We understand one of the biggest barriers to home ownership is raising a deposit.»
He added: «While we will continue to monitor the market carefully, we feel it is the right time to enhance our lending, initially to those looking for their first home. We welcome the government’s announcement on stamp duty and hope our combined changes create a positive impact on a market that, despite being in relatively good health, is still recovering.»
The new mortgages on offer will only be available for buying houses which are at least two years old. The maximum mortgage term will be 25 years.
The choice of low deposit mortgages has been particularly badly hit during the coronavirus crisis.
In March, there were 779 mortgage deals for borrowers with a 10% deposit. By the start of July there were just 70 products available, according to analysis from financial information website moneyfacts.co.uk.
Miles Shipside, commercial director at Rightmove, seemed hopeful that the housing market should start to recover in the coming months.
«There’s been record demand for property on Rightmove since the market reopened which has been boosted even further by the stamp duty announcement, all of which should help activity levels over the coming months,» he said.
According to the Nationwide, UK house prices were 0.1% lower in June than the same month a year ago – the first annual fall since December 2012.
Sales plummeted and viewings halted when the sector was effectively frozen under lockdown.
