Santander unveils help to buy mortgage deal

 

The battle to offer low-deposit mortgages stepped up today after a lender unveiled new deals under the Government's Help to Buy scheme and another announced plans to join the initiative.

Santander said that from tomorrow it will offer a range of fee-free Help to Buy mortgage products for people with a deposit as low as 5%, as the Post Office also confirmed its intention to offer deals through the scheme.

Santander's new Help to Buy range includes a two-year fixed-rate deal with a rate of 4.99% and a five-year fix at 5.49%. Santander is also launching a two-year variable rate tracker at 4.99%. These products do not have booking fees and come with a free valuation and £250 cashback upon completion.

The Post Office said it plans to join the new phase of the Government's Help to Buy Scheme with its financial services partner, Bank of Ireland UK. As well as joining the scheme, the Post Office will increase the number of branch mortgage specialists it has across the country to 100. A spokeswoman for the Post Office said further details will be given about the products it plans to offer in due course.

The announcements were made as a Bank of England report revealed that lenders are expecting to see a significant increase in mortgage availability in the next three months as Help to Buy injects further competition into the low-deposit end of the market.

The Credit Conditions survey of banks and building societies found that lenders have become more willing to lend to mortgage borrowers with deposits below 10% as their risk appetite has returned and their credit scoring criteria has loosened in recent months.

Rachel Springall, spokeswoman for financial information website Moneyfacts, said: "It's great to see a new challenger enter the fray of Help to Buy deals. The market is steadily growing and some borrowers may want to seek an alternative to the high street banks - and the Post Office is a well-known brand."

The new phase of Help to Buy to offer mortgages backed by the state to credit-worthy people struggling to move on or up the housing ladder was launched in October. Lenders including Royal Bank of Scotland, NatWest, Halifax, Bank of Scotland, HSBC and Virgin Money have all joined up.

Another major lender, Barclays, is expected to unveil the products it plans to offer under the scheme later this month.

Last week, Prime Minister David Cameron announced that 6,000 people have put offers in on homes and applied for mortgages thanks to the Help to Buy scheme.

Critics of the scheme argue that it is fuelling housing market demand without a corresponding increase in the supply of homes for sale, which is in turn pushing house prices upwards and encouraging people to stretch their borrowing. New figures released by Halifax show that house prices have surged by 7.5% across the UK over the last year.

Mr Cameron has dismissed fears that the scheme is pumping up a housing bubble and branded sceptics of the mortgage guarantees - such as Liberal Democrat Business Secretary Vince Cable - "London-centric".

One side-effect of Help to Buy has also been to encourage competition in the low deposit mortgage bracket among lenders which are not taking part in the scheme.

In November, Yorkshire Building Society Group, which is not part of Help to Buy, unleashed 36 new 5% deposit mortgage deals on to the market. The deals are available through Yorkshire, Barnsley, Chelsea and Norwich and Peterborough Building Societies.

Norwich and Peterborough Building Society currently sits in Moneyfacts' "best buy" tables in the 5% deposit bracket, with a fee-free five-year fixed-rate deal at 5.29%, which carries an incentive package of a £250 rebate and a free valuation.

Moneyfacts said that competitive deals within the Help to Buy scheme include a 4.79% two-year fixed deal with a £99 fee from HSBC and a fee-free option at 4.99% over the same term from NatWest.

PA

Start your day with The Independent, sign up for daily news emails
Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm today
News
File: James Woods attends the 52nd New York Film Festival at Walter Reade Theater on September 27, 2014
peopleActor was tweeting in wake of NYPD police shooting
Sport
Martin Skrtel heads in the dramatic equaliser
SPORTLiverpool vs Arsenal match report: Bandaged Martin Skrtel heads home in the 97th-minute
News
Billie Whitelaw was best known for her close collaboration with playwright Samuel Beckett, here performing in a Beckett Trilogy at The Riverside Studios, Hammersmith
people'Omen' star was best known for stage work with Samuel Beckett
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'