Belfast Telegraph

Banking giant Santander brings back the 90% mortgage

By Nicky Burridge

There was fresh hope for would-be first time buyers yesterday as banking giant Santander announced 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% to 80%.

Those buying a new build house can now borrow up to 90% of their property's value, up from 80% previously — halving the size of the deposit they need. It is the first time that Santander, formerly Abbey, has lent up to 90% 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% 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% for a flat and 20% for a house.

The deal for first-time buyers is also only available on two mortgage products, a two-year tracker of 4.99% with a £995 fee, and a three-year fixed rate loan of 5.99% 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. “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,” he said.

There has been a significant improvement in the options available to first-time buyers recently. Research from showed that the number of lenders offering fixed rate loans to people with only a 10% deposit has nearly doubled during the past 12 months, while the number of products available has risen by 88% to 147.

Belfast Telegraph