Lloyds Bank reintroduces 10% mortgage deals to first-time buyers
First-time home buyers will be able to take out 10% deposit mortgage deals once more with Lloyds Banking Group (LLOY.L), according to a statement released on Thursday.
The offer will begin from 8 December.
Company shares reached a one-week high on Thursday, up 1.2% to $39.17 a share at around 3.11pm in London, buoyed by market optimism as vaccine rollout plans get underway to deal with the coronavirus pandemic.
There are exclusions to the scheme, including new-build properties. An enhanced credit score requirement will also be applied and the deals cannot be used alongside other “lend a hand” schemes, such as help-to-buy.
“We are committed to helping people take their first step on to the property ladder and while there have been record levels of mortgage approvals over the past few months, raising a deposit is still hands down the biggest challenge for first-time buyers,” said Jasjyot Singh, managing director, consumer and business banking at Lloyds Banking Group.
“Reintroducing options at higher LTVs (loans-to-value) means we can support more people ready to get a foot on the ladder.”
Lloyds is joining other UK banks in re-entering the 10% deposit market, offering news products or expanding access to low-deposit deals.
Nationwide Building Society, for instance, also recently announced plans to re-enter the high loan-to-value mortgage lending market. Though it also comes with constraints, including not lending to customers looking for a mortgage term of more than 25 years and turning down customers who are buying a newbuild property or a flat.
Nationwide is “looking at how it can 'safely go further' with loans to customers who need to borrow 90% of a property's value,” said chief executive Joe Garner.
According to the National Association of Estate Agents (NAEA) advice group called Propertymark, 21% of house sales were made to first-time buyers in October, up from 19% in September.
Some banks have pulled out of offering 10% mortgages as they are deemed riskier investments, a situation that was exacerbated by the COVID-19 economic fallout.
WATCH: Why are house prices rising during a recession?
