Brokers cautious over 95% rates as lenders return

Brokers cautious over 95% rates as lenders return
Credit: Jason Alden/Bloomberg

Lenders are continuing to launch 95 per cent LTV mortgages though brokers have expressed caution over the rates offered.

The Nottingham, for example, has reintroduced residential lending at 95 per cent LTV with a five-year fixed rate at 4.10 per cent.

Nikki Warren-Dean, head of intermediary sales at The Nottingham, said: “A year on from last lending at 95 per cent LTV we are pleased to have this product available.”

"We’re expecting this product to be popular so our message to brokers is to submit well packaged cases to us as soon as possible." 

Dudley Building Society has also launched a five-year fixed rate at 3.99 per cent for regional customers at 95 per cent LTV.

The product is available for purchase and remortgage customers in Dudley, Wolverhampton, Walsall and Birmingham postcode areas, with a maximum advance of £350,000.

Aaron Strutt, product and communications director at Trinity Financial, said: “It is great news that so many more lenders are offering five per cent deposit mortgages again and there is so much choice at the moment.

“These deals are giving first-time buyers hope they will be able to get on the property ladder even if they have to pay a premium to access the low deposit products.”

Corey Whelan, director at Cambridgeshire Money, said first-time buyers borrowing at 95 per cent made up most of his firm’s mortgage applications in March.

Whelan said: “It seems the return of 95 per cent lending has really accelerated a lot of people’s home buying plans.”

Figures from Moneyfacts show a recovery in the number of 95 per cent LTV products, with 112 deals available a week after the mortgage guarantee scheme launched.

But Trinity Financial's Strutt added that prospective first-time buyers considering a five per cent deposit mortgage should consider the possibility of continuing to save.

He said: “In many cases it is likely that buyers could put down a relatively small amount to access a much cheaper rate.”

Indeed, the figures from Moneyfacts showed the average five-year fixed rate of a 95 per cent LTV deal was 4.17 per cent as of April 26, compared to the equivalent rate of 3.63 per cent at 90 per cent LTV.

Chris Sykes, associate director and mortgage consultant at Private Finance, said he would like to see more lenders launching two-year fixed rates as opposed to three- or five-year rates.

Sykes said: “I feel with the rates payable at 95 per cent it is a large commitment to be fixed in for five years at that level.”

Joanne Chapman, mortgage adviser at Plus Financial Group, likewise said the return of 95 per cent mortgages was encouraging, although the rates were “often less attractive”.

Chapman added: “We often recommend clients consider using a bigger deposit and aim for 90 per cent LTV to avoid paying more interest than necessary. This was also the case pre-pandemic.”

Average fixed rates

 March 2020April 2020April 202126 April 2021
95% LTV: two-year3.26%3.47%4.47%4.02%
95% LTV: five-year3.58%3.90%4.32%4.17%
90% LTV: two-year2.57%2.84%3.45%3.42%
90% LTV: five-year2.91%3.24%3.64%3.63%
Data shown is as at the first available day of the month, unless stated otherwise. Source:

But Kevin Roberts, director at Legal & General Mortgage Club, said the 95 per cent LTV market could become more competitive as more lenders join.