Accord Mortgages has become the first lender to return to the 95 per cent loan-to-value market.
The intermediary-only lender will be offering a five-year fixed rate of 3.99 per cent tomorrow (March 17) with a £995 fee and free standard valuation.
Accord’s standard underwriting policy and terms will apply, but the loan will come with a maximum 4.49x loan to income ratio to ensure “prudent” affordability.
The maximum loan size is £500,000, and flats and new-build homes are not permitted.
Data from Moneyfacts shows there were just five products available at 95 per cent LTV at the start of this month, compared to 391 at the start of March last year.
Despite the fact Accord is the first lender to return to the 95 per cent LTV market, and the announcement comes after the launch of the government’s mortgage guarantee scheme, Accord has said it will not be using the scheme.
The lender has said it will monitor demand for its 95 per cent LTV mortgages to ensure service levels are managed carefully.
Jeremy Duncombe, managing director of Accord Mortgages, said: “As the first lender to launch a new 5 per cent deposit mortgage to the market, it’s important we balance demand with being able to offer the high levels of service brokers and clients expect. As such, this product may be withdrawn at relatively short notice, but we will continue to communicate our intentions proactively wherever possible.
“However, as more lenders join us in the 95 per cent LTV mortgage market, either with or without the mortgage guarantee scheme, we’re hopeful buyers with just a 5 per cent deposit will be able to benefit from a more sustained offering in the market.”
Duncombe added: “Part of our purpose as one of the UK’s largest building societies is to help people own their own home, and the unique challenges of the last year have made that harder than ever for some.
“Increasing house prices, the need to save for a larger deposit and limited choice in the higher LTV markets, means the goal posts have continually moved for many.
“We were one of just a handful of lenders that continued to offer 90 per cent LTV mortgages during the pandemic and have been monitoring the market closely to ensure we carefully broaden our support to those with even smaller deposits.
“This new 95 per cent mortgage will give brokers another option to help clients with smaller deposits realise their home ownership ambitions.”
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