Best first-time buyer mortgages: NatWest relaunches a 90% LTV

NatWest has launched four new 90 per cent loan-to-value mortgages, after pulling similar products earlier this year due to the economic effects of the pandemic. 

The four new products are two and five-year fixed rates and have been launched this week under the NatWest and Royal Bank of Scotland brands. 

They are open to both first-time buyers and home movers, but those buying a new-build home will still be limited to 80 per cent LTV mortgages.   

Buyer boost: NatWest and RBS are offering mortgages with a 10% deposit once more

The two-year fixed deal has an interest rate of 3.75 per cent with no product fee, or 3.55 per cent and a £995 fee. 

Meanwhile, the five-year fixed product has a rate of 3.8 per cent with no product fee, or 3.6 per cent and a £995 fee. 

These aren’t the best rates available, but having one of Britain’s biggest lenders back in the low deposit market could help stimulate competition.

NatWest said customers who took advantage of the Government’s mortgage payment holiday earlier in the year could apply for one of the new loans, as long as the breaks had concluded and at least one full monthly payment had been made. 

High-LTV mortgages are popular with first-time buyers because they do not have funds from the sale of an existing home to draw on.  

NatWest stopped offering mortgages at more than 80 per cent LTV to new customers in April, but then relaunched its 85 per cent products in July.

On a typical £245,000 home, a 10 per cent deposit is £24,500. This compares to £36,750 at 15 per cent and £49,000 at 20 per cent. 

NatWest is one of several banks to return to the high-LTV mortgage market in recent weeks, amid reports of housing market ‘resilience’. 

Yorkshire Building Society was one of the first to do so in late November. Halifax also relaunched its 10 per cent deposit products last week, although these are exclusively available to first-time buyers.  

While 90 per cent mortgages are reappearing, mortgage brokers have warned that choice is still much more limited than this time last year, and that costs are higher. 

Matt Coulson, founder of mortgage broker Heron Financial, said last week: ‘It’s great to see big players such as Halifax and Nationwide re-entering the 90 per cent mortgage market in order to help first-time buyers onto the housing ladder.

‘However, these products are not without their restrictions with some products only accessible to those with a gold-plated credit score.’

Deals were pulled in the spring because banks were worried about homeowners falling into negative equity due to falling house prices. 

However, there has been a property market boom largely fuelled by the stamp duty holiday which is currently set to end on 31 March 2021. 

First-time buyers already benefited from stamp duty relief on the first £300,000 of a purchase, which has been in place since November 2017.  

The prospect of falling household incomes due to wider economic uncertainty also led to a lower risk appetite from lenders.

Banks were also concerned about their capacity to deal with new applications, and there were restrictions on valuations and surveys during the first lockdown.  

Miguel Sard, managing director of home buying and ownership at NatWest, said: ‘We are committed to supporting customers who are looking to move – whether that’s first-time buyers or those moving home. 

‘We recognise how challenging the last few months have been for all buyers, particularly for first time buyers who are ready to get a foot on the ladder and raise a deposit. 

‘We are pleased to be one of the first lenders to fully support both segments of the market.’

NatWest has also launched a ‘green’ mortgage which offers a discounted interest rate to customers buying a home with an energy efficiency rating of A or B. 

The banking giant says it is aiming to help customers become more energy efficient and has a bold aim that half of its mortgage book will be an EPC C rating or above within the next decade.  

This post first appeared on Dailymail.co.uk