Posts tagged ‘Loan’
Borrowers with a deposit of just 5 per cent are being fought over by lenders, triggering a mortgage rate war.
Yorkshire Building Society is the first lender to enter the ring after launching a fiercely competitively range of home loans for those looking to borrow up to 95 per cent of a property’s value.
It means borrowers can buy an average home costing £170,000 with a deposit of £8,500.
With rates of 4.69 per cent, it means they pay £915 a month in mortgage payments.
Until today, Yorkshire building society only lent to those with a 10 per cent deposit after withdrawing 95 per cent deals at the height of the credit crisis in 2008.
More lenders are understood to be lining up to launch similar deals, including HSBC, Barclays and Santander.
It comes as the Council of Mortgage Lenders reported the highest level of mortgage lending since October 2008 at £18.6bn.
Lending to those with a small deposit is controversial amid concerns that it can lead to them to borrow more than they can afford.
Yorkshire’s chief executive Chris Pilling said: “Our fundamental role as a building society is to support as many people as possible to achieve their aspirations to buy their own home.”
He said it was vital that loans were made in a ‘responsible and prudent way’.
It follows the launch of the Government’s Help to Buy scheme this year. The scheme aims to help those with a small deposit with the help of interest-free equity loans and a mortgage guarantee.
The Yorkshire’s products are not part of the Government’s scheme.
Three homes for sale at £170,000: