Mortgage lenders, including Lloyds, NatWest and HSBC, prepare to launch ultra-low 5% down payment deals

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Major mortgage lenders including Lloyds, NatWest, Santander, Barclays and HSBC prepare to launch a wave of ultra-low 5% down payment deals on homes up to £ 600,000 to boost the real estate market

  • Big lenders say they will support the UK government’s 5 percent home deposit scheme
  • Starting later this month, it will be open for applications through December 31, 2022
  • Lenders include Lloyds, NatWest, Santander, Barclays, HSBC UK and Virgin

Major mortgage lenders are gearing up to launch a wave of ultra-low deposit deals for home buyers.

Several big high street names have already confirmed their intention to participate in a new UK government-backed 5 percent deposit system, which was revealed in the recent budget.

Lenders jumping on board the new scheme include Lloyds, NatWest, Santander, Barclays, HSBC UK and Virgin Money.

Some lenders are expected to provide more information on what they have to offer in the coming days.

The new mortgage guarantee scheme aims to increase interest among UK lenders in loans with high creditworthiness to creditworthy customers.

Several big high street names have already confirmed their intention to join a new UK government-backed 5 percent deposit system.  Stock image

Several big high street names have already confirmed their intention to join a new UK government-backed 5 percent deposit system. Stock image

It will be available to current home owners as well as first-time buyers looking for a home for up to £ 600,000. Borrowers will still have to pass the usual affordability checks.

In general, the scheme can be used for new or existing properties.

Starting later this month, it will be open for applications through December 31, 2022.

The initiative will work by enabling lenders to purchase a government guarantee that would offset some of their losses in the event of foreclosure.

The new arrangement will reflect a ‘tried and true’ initiative that has revitalized the mortgage market in the recent past.

In 2013, the government launched the Help to Buy mortgage guarantee scheme in response to a similar shortage of low-deposit mortgages following the 2008 financial crisis, which has helped more than 100,000 households buy their own homes across the UK.

The scheme will be available to current homeowners as well as first-time buyers looking for a home for up to £ 600,000

The scheme will be available to current homeowners as well as first-time buyers looking for a home for up to £ 600,000

The scheme will be available to current homeowners as well as first-time buyers looking for a home for up to £ 600,000

The previous Help-to-Buy scheme also had the effect of intensifying competition in the 5 percent of deposits bracket among lenders not part of the scheme.

They increased their low deposit range to compete with lenders participating in the initiative.

Lloyds Banking Group has confirmed that its new deals will be available across its brands, Lloyds Bank, Bank of Scotland, and direct from Halifax, as well as through Halifax Intermediary.

Two-year and five-year product options will be made available.

A Santander spokeswoman said: “We are delighted to support the government’s 95 percent mortgage guarantee scheme and look forward to sharing all the details of the products available soon.”

A Virgin Money spokesperson said: “We are pleased to say that we will be actively participating in the government’s mortgage guarantee scheme and will announce our proposal next month.

“The products available are Virgin Money only and full details will be disclosed at launch.”

Many low deposit mortgages disappeared from the market in the early days of the coronavirus pandemic as lenders were concerned about the potential for these borrowers to end up in negative equity – because they owed more to their ownership than it’s worth was – if house prices were to fall. the hard economy.

However, house prices have reached record highs in recent months.

Lender confidence is also showing tentative signs of a return.

According to financial information website Moneyfacts, the 5 percent deposit deals have already begun to return to the market in recent weeks, outside of the scheme.

Moneyfacts recently counted 34 deals for borrowers with a 5 percent down payment in April, down from just five in March.

This is a far cry from the situation a year ago, when there were more than 160 deals available to borrowers with a 5 percent deposit.

Britain’s largest construction company, Nationwide, said it is exploring options for a full return to 95 percent of loan-to-value loans in the coming months.

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