Santander is preparing to introduce mortgage deals for customers with only a five per cent deposit.
From February 27, the lender is increasing the maximum loan-to-value (LTV) available on New Build houses and flats to 95 per cent.
As it stands, Santander offers borrowing up to a maximum of 85 per cent LTV for New Build Houses and 80 per cent LTV for New Build flats.
With this decision, the bank is one of only six lenders in the UK to provide mortgages up to 95 per cent LTV across New Build houses and flats through all builders and brokers.
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The lender is making changes to its product offering to entice new homebuyers
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Customers purchasing a New Build with a 95 per cent LTV mortgage will be able to pick from the Santander’s current 95 per cent range of five-year fixed rate deals.
This move from the lender comes as the ongoing mortgage price war in the UK has cooled down in the last couple of weeks.
Lenders, including Santander, have made the decision to hike mortgage rates in a reversal of the recent trend of cuts.
Here is a breakdown of the LTV mortgage deals available with Santander, as well as the changes to rates from next week:
- Standard residential new build house at 85 per cent – 95 per cent from February 27
- Standard residential new build flat at 80 per cent – 95 per cent from February 27
- Shared Ownership new build house at 85 per cent – 90 per cent from February 27
- Shared Ownership new build flat at 80 per cent – 90 per cent from February 27
- Buy to Let flat at 70 per cent – 75 per cent from February 27.
Graham Sellar, Santander’s head of development in the mortgages department, described saving for a mortgage deposit as “one of the biggest hurdles for aspiring homeowners” in the Uk.
He said: “Our change will not only help more buyers get onto the property ladder sooner but also, with the majority of New Build properties achieving an EPC rating of A or B, support the wider transition to greener living.”
This move from Santander will coincide with the beginning of 2024 New Home Weeks (NHW), an awareness campaign started by the Home Building Association.
David O'Leary, the executive director of the representative body, added: “Santander's introduction of 95 per cent mortgages for new build homes is extremely welcome.
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The Bank of England base rate is at a 15-year high of 5.25 per cent GB NEWS“Most of us recognise that there is a shortage of homes and it’s becoming harder for younger households to step into homeownership.
“Improving the availability of mortgages not only helps address the country’s growing housing divide but it provides confidence for house builders to invest and continue to deliver more high quality and energy efficient new homes in the years ahead."
Adrian MacDiarmid, the head of Mortgage Lender Relations at Barratt Developments PLC, outlined why this move is important from a high street lender.
He explained: “The increase in loan to values is a testament to Santander's support for the New Build market and to their commitment to addressing not just the challenge of First Time Buyers aspiring to own their own home, but also our collective responsibility to support the transition to a lower carbon economy.”