M&S Bank has added a 95 per cent loan-to-value and 35-year term products to its mortgage range, in a move to target first-time buyers.
The lender has extended its maximum loan-to-value to 95 per cent on a two and five-year fixed rate product and a two-year tracker mortgage.
The maximum mortgage term was increased to 35 years across first-time buyer and home mover products, including a five-year fixed rate at 3.99 per cent at 95 per cent loan-to-value.
The 35-year term is also available on the lender's homebuyer range, with a two-year tracker offered at 80 per cent loan-to-value at a rate of 1.59 per cent, coming with a £995 fee.
Sue Fox, chief executive of M&S Bank, said its first-time buyer range had proved particularly popular since the M&S Bank mortgage range launched in January.
She said: "But we know a deposit for that much longed for first home is incredibly challenging for most people so, since launching our mortgage range, we’ve continued to look at ways in which we can further support customers realise their home ownership dreams.
"We hope that a greater range of terms across our mortgages and loan-to-values across these three new products will be a welcome addition, alongside the £1,000 cashback and free valuation we already offer, as well as the facility to purchase with friends or family."
M&S Bank allows up to four borrowers who will live in a property to take out a mortgage together, an offer an M&S spokesperson said was ideal for a group of friends or siblings.
Daniel White, managing director at White Financial Services, warned that while higher loan-to-values benefited borrowers in terms of a smaller deposit requirement, 95 per cent loan-to-value offers should be viewed with caution in the current uncertain market.
He said: "Although confidence is coming back to the market and more lenders are getting involved with higher loan-to-values, the other side of the coin sees negativity around house price and value and we do not yet know what impact Brexit will have on the market.
"When considering a 95 per cent loan-to-value at this moment in time, it needs to be remembered that purchases of that nature could have a negative impact on borrowers in a couple of years time if they find themselves in negative equity when their rate expires and they move on to reversion rates.
"If lenders are willing to offer higher loan-to-values now, they also need to offer a decent product transfer range to help with negative equity in the future - it is no good offering a good deal now and not helping out in future uncertainty."
Earlier this week, the government announced its backing of three start-up companies offering apps to renters struggling to get on the property ladder.
The fintech companies hope to offer a solution for first-time buyers to record and share their rent payment data towards their credit score.
rachel.addison@ft.com
