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.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
- 1 Katie Hopkins gives rare glimpse of sensitive side with heartfelt open letter to her children penned in case she dies from epilepsy
- 2 Rihanna's Met Gala dress took one Chinese woman 2 years to make, was reduced to omelette meme in 2 seconds
- 3 Top Gear: Jodie Kidd, Philip Glenister and Guy Martin 'in advanced talks' to replace Jeremy Clarkson and co
- 4 #JeSuisEd: People share photos of themselves eating awkwardly in solidarity with Labour leader
- 5 Women think Irish men are the sexiest, survey finds
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
General Election 2015: Sturgeon claims Scots 'appalled' by Ed Miliband's refusal to work with SNP
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...
£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...
Day In a Page
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business