Newcastle Intermediaries has re-entered the 95 per cent loan-to-value space.
The mutual is the latest in a series of firms to re-launch such products following an industry-wide exodus during the pandemic which left loan-to-value ratios above 90 per cent at their lowest ever level since 2007.
Newcastle Intermediaries has unveiled two and five-year 95 per cent loan-to-value mortgages at fixed rates of 3.80 and 3.89 per cent, respectively.
John Truswell, intermediary mortgage head at Newcastle Building Society, said the product range was designed to suit “first time buyers, second steppers, home movers and re-mortgage customers”.
He added that high loan-to-value products were still “limited elsewhere in the market”. At the end of last week, West Brom added a 95 per cent loan-to-value product with a two-year fixed rate of 3.79 per cent.
The product launches follow calls from the industry for more affordable products in this range.
In December, Aaron Strutt, product and communications director at Trinity Financial, told FTAdviser many borrowers with smaller deposits were frustrated that high LTV deals were “so much more expensive” compared with the start of the year.
Last week, Accord Mortgages cut the rates on its 85, 90 and 95 per cent loan-to-value products in a bid to help brokers compete for borrowers with smaller deposits.
The intermediary-only lender’s two-year fixed rates now sit at 3.69 per cent for 95 per cent loan-to-value products, which is less than Newcastle Intermediaries’ debut rate.
Accord’s rates initially started at 3.99 per cent back in March for this product. Since then, the lender has cut the rate by 0.3 percentage points.
Strutt said when first-time buyers take “the often near 4 per cent rates, they aim to swap to a better deal in two years' time”.
In the Budget this year, the chancellor confirmed the launch of a mortgage guarantee scheme for small deposit homebuyers, amid the dramatic decline in the number of 95 per cent LTV mortgages available since the pandemic.
According to mortgage lending statistics published by the Financial Conduct Authority this month, the share of mortgages above 90 per cent LTV was 1.1 per cent, 4.1 percentage points lower than a year earlier.
ruby.hinchliffe@ft.com
