Surging inflation and increasing interest rates have strained household budgets and lessened the sum potential homeowners are able to save towards deposits
The Skipton Building Society has launched the UK’s first mortgage that does not require a deposit and can be up to 100% of a house’s value.
Skipton stated its latest product would allow renters to get on the property ladder, without depending on parents or other guarantors for the deposit, which is usually about 10% of the value.
A study of 2,000 renters by the lender shows that 85% want to get on to the property ladder, but are not able to do so due to the cost-of-living crisis.
Surging inflation and increasing interest rates have strained household budgets and lessened the sum potential homeowners are able to save towards deposits.
Over one in three of those polled stated they were struggling to save, because of the rise in rent payments, while 42% think their mortgage repayments would be more affordable than their existing rent.
The lender stated its Track Record Mortgage product would allow tenants to break out of a cycle many think they are trapped in.
People trapped in renting is one of the UK’s major housing challenges, having a huge effect on the fabric of our society, according to Charlotte Harrison, chief executive of home financing at Skipton.
With rising rents and the cost-of-living crisis further affecting people’s capability to save for a house deposit, it is making it nearly impossible for people get on to the property ladder, Harrison said.
We can see a clear gap in the market for people who have a strong record of making rental payments over a period of time so can evidence mortgage affordability — but there is presently no solution for them to purchase a property because of lack of savings or access to family wealth, Harrison said.
It is time for a reconsider on these huge hurdles to house ownership, and we are proud to take the lead on bringing to the market solutions for such a huge social issue, Harrison said.
Those applying for a Skipton Track Record Mortgage would have to prove a minimum of a 12-months good track record rental history and be FTBs over 21.
Subject to the usual affordability and credit score tests, eligible customers would then be offered a 100% LTV mortgage with a 5-year fixed rate at 5.49% over a maximum term of 35 years.
Skipton will also make sure that those taking out such a mortgage will not pay more in monthly repayments than they did in rent for the past six months of their tenancy.