Santander cuts deposits for first-time buyers

Banking giant Santander announced today it was slashing the deposits it demands from first-time buyers purchasing new-build properties.

The UK's second biggest mortgage lender is increasing the maximum amount it will lend to first-time buyers purchasing a new apartment from 70 per cent to 80 per cent.



Those buying a new build house can now borrow up to 90 per cent of their property's value, up from 80 per cent previously - halving the size of the deposit they need.



It is the first time that Santander, formerly Abbey, has lent up to 90 per cent on a new property since March 2008.



The move is a further sign that lenders are becoming increasingly confident about the prospects for the housing market, particularly new build properties.



Many lenders demanded higher deposits on new homes than on older housing stock during the property market correction, which saw up to 50 per cent knocked off the value of some city centre flats.



The new loan-to-value ratios only apply to first-time buyers, with other borrowers still needing deposits of 30 per cent for a flat and 20 per cent for a house.



The deal for first-time buyers is also only available on two mortgage products, a two-year tracker of 4.99 per cent with a £995 fee, and a three-year fixed rate loan of 5.99 per cent with a £495 fee.



Phil Cliff, mortgage director at Santander, said: "We have seen confidence return to this segment of the property market and by increasing the maximum LTV (loan to value) on new build mortgages we are able to offer prudent first-time buyers more choice and flexibility."



Ray Boulger, senior technical manager at independent mortgage advisor John Charcol, welcomed the move and predicted other lenders would now follow suit.



He said: "For about three years now there have been restrictions from many lenders on the maximum loan-to-value rations they will do on new build properties, particularly flats.



"Having one of the major lenders in the market go back into higher end LTV loans on new build properties means other lenders will follow suit."



But he added that the move was "long overdue".



There has been a significant improvement in the options available to first-time buyers in recent months.



Research from MoneyExpert.com showed that the number of lenders offering fixed rate loans to people with only a 10 per cent deposit has nearly doubled during the past 12 months, while the number of individual products available has risen by 88 per cent to 147.



Figures from financial information group Moneyfacts also show that there has been a 38 per cent increase in all deals for people borrowing up to 90 per cent of their home's value since the beginning of the year.



Pierre Williams, head of research at MoneyExpert.com, said: "For those looking to borrow a sizeable percentage of the value of their home this is clearly good news.



"Lenders have been risk averse in the past year and have shied away from high LTVs. Measured optimism over the housing market, though, seems to be encouraging higher value lending."



But borrowers with only a 10 per cent deposit can still expect to pay considerably higher interest rates than those with more money to put down.



The average interest rate charged on all fixed rate mortgages is currently 5.4 per cent, but the average rate for people borrowing 90 per cent of their home's value is 6.3 per cent.



Meanwhile, separate research showed that building societies are continuing to hold their own against banks, offering nearly half of all best-buy products.



The mutual sector offers 24 out of the 50 most competitive mortgage rates on loans with LTVs of 60 per cent, 75 per cent, 80 per cent, 85 per cent and 90 per cent, according to website realpricecomparison.com.



Building societies were particularly strong on products for people borrowing between 75 per cent and 90 per cent of their home's value, accounting for 60 per cent of best-buy deals, including offering eight out of 10 leading mortgages for people with just a 15 per cent deposit.

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Pricing Analyst

    £30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

    Guru Careers: C# Project Team Lead

    £55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

    Day In a Page

    Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

    The 161-page dossier that exposes Fifa's dark heart

    How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
    Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

    Exclusive interview with Tripoli PM Khalifa al-Ghweil

    'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
    Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

    Raymond Chandler's Los Angeles

    How the author foretold the Californian water crisis
    Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

    Art attack

    Chinese artist who posted funny image of President Xi Jinping facing five years in prison
    Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

    Cher is the new face of Marc Jacobs

    Alexander Fury explains why designers are turning to august stars to front their lines
    Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

    'I'm climbing Ben Nevis for my daughter'

    Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
    10 best wedding gift ideas

    It's that time of year again... 10 best wedding gift ideas

    Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
    Paul Scholes column: With the Premier League over for another year, here are my end of season awards

    Paul Scholes column

    With the Premier League over for another year, here are my end of season awards
    Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

    Liverpool have seen too much tragedy to forget Heysel

    Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
    Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

    Khan’s audition for Mayweather may turn into a no-win situation

    The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
    Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

    Blundering Blair quits as Middle East peace envoy – only Israel will miss him

    For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
    Fifa corruption arrests: All hail the Feds for riding to football's rescue

    Fifa corruption arrests

    All hail the Feds for riding to football's rescue, says Ian Herbert
    Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

    The Kurdish enclave still resisting the tyranny of Assad and Isis

    In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
    How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

    How I survived Cambodia's Killing Fields

    Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
    Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

    How Stephen Mangan got his range

    Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor