Virtually all mortgage lenders pulled their small-deposit loans at the start of the coronavirus crisis
First-time buyers have been given fresh hope they will be able to get on to the property ladder as banks have slowly relaunched 90pc mortgage loan.
Virtually all mortgage lenders pulled their small-deposit loans, commonly used by young buyers, at the start of the coronavirus crisis. Moneyfacts, the data analyst, said the number of 90pc loans available fell from 779 in March to 56 at the start of this month.
Lenders have been slow to return, given the concerns house prices will fall once the stamp duty tax break ends in March. Banks also feared being flooded with risky customers if they re-entered the 90pc market on their own.
However, smaller lenders have tested the waters in recent weeks, which has persuaded major players such as TSB and Yorkshire Building Society to follow suit. There are also renewed hopes for the economy after the successful vaccine trials. There are now 80 deals available, Moneyfacts said.
Nationwide, which had offered a limited range of 90pc loans to first-time buyers since July, also said it would permit applications from all customers, not just first-timers. From mid-December, it will also remove a restriction that had blocked customers from using deposits that were gifts from family members.
However, the building society will not offer loans against flats, as these are more susceptible to price falls.
Mark Harris, of mortgage broker SPF Private Clients, said Accord Mortgages, Atom Bank, Bank of Ireland, TSB and Yorkshire Building Society had all launched 90pc loans in recent days.
However, the lack of availability means borrowers have seen small deposit rates rise, he said. A year ago, 90pc two-year fixes were available with rates below 2pc but now the equivalent loans cost well over 3pc.
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