Yorkshire BS adds to its 95% LTV deals
Yorkshire Building Society Group has added to its range of 95% loan-to-value mortgage deals, increasing the number of such loans on the market by 56%.
The mortgage rates for homebuyers with deposits or equity of just 5% start at 4.59%, less than the 4.99% rates available from RBS and NatWest through the Help to Buy mortgage guarantee scheme.
Thirty-six two and five-year fixed-rate 95% lTV mortgages are now available through Yorkshire, Barnsley, Chelsea and Norwich & Peterborough (N&P) Building Societies and Accord Mortgages (sold through intermediaries).
Some of the mortgages have no product fee and come with £500 cashback on completion. This includes the Yorkshire Building Society two-year fix at 4.89%, reverting to 4.99% after the fixed period ends.
However, other rate mortgages in the range seem less appealing, such as the Chelsea Building Society two-year fix at 4.59% (reverting to 5.79%), which has a whopping £1,545 fee.
Several offset mortgages are also included within the 95% LTV range, "encouraging borrowers to continue and benefit from good savings habits," said the Yorkshire group.
While the loans are available for all homebuyers and movers immediately, they will be rolled out to customers looking to remortgage in early 2014.
Chris Pilling, Yorkshire Building Society Group's chief executive, said: "We support the intentions of the Help to Buy Mortgage Guarantee scheme in encouraging more lenders to provide lower deposit mortgages but are able to deliver on its aims without relying on Government support."
A survey conducted by the Group found that 25% of first-time buyers, home movers and remortgage customers favoured traditional lending outright compared to Help to Buy.
Pilling added: "House prices have stabilised and improved recently to make this the right time for us to offer such a wide selection of competitive 95% LTV mortgages, and they address the toughest obstacle faced by first-time buyers, and some next time buyers, which is raising a big enough deposit.
"Our fundamental role as a building society is to support, in a responsible and prudent way, as many people as possible achieve their aspirations to buy their own home. We do that day-in and day-out already and our new 95% LTV deals will allow us to help even more first-time buyers."
So how do these new deals stack up against what's already available under Help to Buy?
Andrew Montlake, managing director of mortgage broker Coreco, told Moneywise: "These new products are to be welcomed and in most cases look to be a cheaper alternative to the products available from the two current lenders who offer the Help To Buy 2 scheme [RBS and Halifax]. A wide range of products gives the consumer choice and offering an offset facility is an excellent addition of a very useful benefit."
He added: "Whilst the Yorkshire Group has a reputation for taking the 'kitchen sink' approach to underwriting which will make these products tough for some to access and slow going for others, this does mean that only the most creditworthy gain access which, at 95% LTV, is sensible.
"This is perhaps another example of the Help To Buy Scheme acting as a catalyst for other lenders to prove they can offer their own 95% products without the need of government support and I hope that other lenders follow its lead."
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.