Mortgage market shake-up: High street banks are breaking the mould for first-time buyers by introducing 100% mortgages, no deposit required. Metro Bank has become the latest lender to reintroduce a product that was largely absent since the financial crisis. The move follows a year of lenders relaxing affordability criteria and developing more flexible mortgage solutions.
Lloyds and Halifax led the charge with a mortgage requiring just £5,000 as a minimum deposit in May. This five-year fixed-rate deal allows borrowing up to 98% of a property's value, capped at homes worth £300,000. Santander offers a similar product with a £10,000 minimum deposit but permits borrowing up to £500,000 at 98% LTV.
Skipton Building Society provides 100% mortgages for current and recent renters, allowing loans up to £600,000. Yorkshire Building Society offers a 99% LTV product with a maximum loan of £495,000. Another option gaining traction is the Joint Borrower, Sole Proprietor (JBSP) mortgage, which enables family members or friends' incomes to be included in the application without making them legal owners.
Metro Bank's new JBSP deal allows borrowing up to 100% of a property's value, with a maximum loan of £675,000, provided an immediate family member acts as a joint borrower. While these products offer a lifeline to many, borrowers should be aware that higher interest rates often accompany lower or no deposits. Metro Bank's JBSP deal carries a five-year fixed rate of 6.99%, for example.
The complexity and varied eligibility criteria across lenders mean that comparing deals requires careful consideration, often best navigated with professional mortgage advice.