The move follows an announcement by the government earlier this week that it will extend the mortgage guarantee scheme by one year. Due to end this month, the scheme will now remain in place until December 2023.
Natwest has informed brokers that from today (December 22) two new 95 per cent loan-to-value products will be available for both first time buyers and home moves, replacing the products that were available previously within the MGS scheme.
A two year-fixed rate product is available with an interest rate of 6.40 per cent, while a five year-fixed product is available with an interest rate of 5.80 per cent. Both have no product fee and come with £750 cashback.
The two deals are identical to the deals withdrawn from the mortgage guarantee scheme.
No surprise
Responding to the announcement, brokers have said the move is largely unsurprising given the costs associated with the mortgage guarantee scheme.
Scott Taylor-Barr, a financial adviser at Carl Summers Financial Services said: “From the conversations I have had with lenders over the years, the government's mortgage guarantee scheme was expensive to be part of, with many lenders choosing from the outset to lend at 95 per cent loan-to-value without using the scheme.”
Adding to this, Craig Fisher, director at Lodestone Mortgages & Protection said the move is an indication that the mortgage market is “open for business”.
“Not only are Natwest sticking their head above the parapet, but they are also doing it in style by withdrawing from the government scheme that provides them with a guarantee.
“This is a clear indication to all that they have money to lend and that they don't believe there will be too much of a slide in property prices.”
Fisher added: “I do fear for their already stretched service levels, though. However, this is a positive signal that first-time buyers will welcome.”
In the last year, the number of high loan-to-value products available on the market has dwindled.
According to Moneyfacts, at the beginning of this week there were 130 95 per cent loan to value mortgage products available on the market, compared to 274 at the beginning of September.
This represents a significant drop on the same period last year, when there were 353 95 per cent products available on December 1, 2021.
However, some in the industry say simply counting the number of products on offer isn’t an accurate reflection of the state of the market for first time buyers.
