The Nationwide has announced it is to lower the minimum deposit required from first-time buyers to 10 per cent from 20 July. The building society, the UK’s largest, had restricted its mortgages back in June in response to the coronavirus pandemic.
According to the Guardian, Henry Jordan, the director of mortgages at Nationwide, said “First-time buyers are vital to breathing life into the housing market and economy. We understand one of the biggest barriers to homeownership is raising a deposit.”
This follows the announcement from the government of a temporary stamp duty holiday for people in England and Northern Ireland. Homebuyers will not pay any stamp duty on the first £500,000 of a purchase under the tax break that will be in place until 31 March 2021.
While there are signs that the UK housing market is recovering, Nationwide will be offering a limited number of 90 per cent loan-to-value mortgages to first-time buyers. Since June, only customers with a 15 per cent deposit would have been able to apply for a mortgage with the building society.
Mr Jordan said that the firm will continue to monitor the situation and the market carefully, but the timing was right to enhance its lending.
The new mortgages on offer will only be available for buying houses which are at least two years old. The maximum mortgage term will be 25 years.
The COVID-19 pandemic has hit low deposit mortgages particularly badly. In March there were 779 mortgage deals for borrowers with a 10 per cent deposit, but by July this had dropped to 70.
According to the Nationwide, UK house prices were 0.1 per cent lower in June than the same month a year ago – the first annual fall since December 2012. Sales plummeted and viewings halted when the sector was effectively frozen under lockdown.
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