Mortgages  

Post Office launches first time buyer range

Post Office launches first time buyer range

The Post Office has launched a range of fee-free cashback deals at a maximum loan to value of 95 per cent.

The deals, which include £500 of cashback on completion, are available on two, three and five year fixed rates.

Borrowers can fix for two years at a rate of 3.89 per cent, for three years at 3.98 per cent, or for five years at 4.09 per cent.

Article continues after advert

The move follows fears that the number of mortgages available to first-time buyers with small deposits would decrease after the government pulled the Help to Buy guarantee scheme in December.

The scheme, which incentivised banks and building societies to lend to buyers with smaller deposits by offering to compensate the lenders for missed payments, had led to a huge increase in the availability of 95 per cent mortgages.

After the scheme ended, some key lenders, including HSBC, pulled their 95 per cent loans from the market.

However, Owen Woodley, Managing Director of Post Office Money, said that the group was committed to "remaining inclusive" to those wishing to buy a home.

"We know from our research that prospective homebuyers see the deposit as the biggest barrier to homeownership, so we hope the launch of our 95 per cent LTV deals will prove a particular help for those struggling to get on the ladder," he said.

Simon Webster, from Facts & Figures Financial Planners, described the deals as "attractive".

"A first time buyer deal at below four per cent is good value in the long term," he said. "You expect to pay a premium for 95 per cent mortgages."

Other lenders still offering 95 per cent mortgages include NatWest, which offers an initial rate of 3.69 per cent fixed for two years, fee free and Santander which offers a 3.74 per cent base rate tracker for two years fee free.

Recent figures suggest that interest from first-time buyers is still strong.

Yorkshire Building Society said earlier this week that it had seen a 91 per cent year-on-year increase in first-time buyers seeking a 95 per cent loan-to-value (LTV) mortgage from January 2016 to January 2017.