Yorkshire Building Society is to offer first-time buyers a two-year fixed-rate mortgage at 3.25 per cent.
The 95 per cent loan-to-value mortgage will specifically target those wishing to get on an increasingly difficult housing ladder, but who only have small deposits to achieve that.
Yorkshire is also offering a competitive 1.97 per cent two-year fix product for remortgages and home purchasers with a 10 per cent deposit available with a £995 product fee and £250 cashback on completion.
This latest product follows on the heels of the launch of the lowest mortgage rate from Yorkshire of 0.89 per cent – a two-year discounted standard variable rate (SVR) deal available to anyone seeking to borrow up to 65 per cent of the value of their property.
The 0.89 per cent mortgage is also only available directly from the lender and not through intermediaries.
Charges
The product has a £995 fee and £250 completion cashback.
Reactions
Provider view
Charles Mungroo, mortgage product manager at Yorkshire Building Society, said: “It’s been the season for record low mortgage rates. However the focus has mainly been on borrowers with larger deposits.
“We’re committed to providing our customers with a home of their own and believe it’s important to offer competitive home loan options to suit a range of borrowing needs.
“We hope our latest rate reductions appeal to those with smaller deposits or equity amounts and the cashback offer will help to reduce the upfront costs of buying a home.”
Adviser view
Martin Stewart, director at London Money, said: “Rate wise this isn’t too bad at 3.25 per cent. It’s not horrendous, it’s there or there about. It might do well in Yorkshire, but it might not do that well in somewhere like London.
“It depends where they’re pitching it. If they are pitching that for the northern market, I think that should be absolutely fine.
“In London the bank of mum and dad is throwing a lot of money at kids at the moment, so first-time buyers with a 20 or 20 per cent deposit isn’t uncommon right now and in that case you’re going to get a rate starting with a one instead of a three. So, for the northern market probably, for London and the south east, probably not.”
Verdict
It is clear that with first-time buyers still finding it almost impossible to get on to the housing ladder, something has to give, and 95 per cent LTV mortgages are one way of going about it, especially for those individuals, couples or families with small deposits. Mortgage products have to reflect their surroundings, but they are always a risky proposition.
However, the 3.25 per cent offer is not the best on the market and can be trumped by the Family Building Society, with a similar deal at 2.69 per cent, or the Marsden at 2.79 per cent, or Barclays also at 2.79 per cent. In fact, that only scratches the surface for available competitive products – time to put your thinking cap back on Yorkshire.
