Lloyds reintroduces 10% mortgages

Bank of Scotland owner Lloyds Banking Group has announced that it is reintroducing 10% deposit mortgage deals after COVID-19 crisis saw banks and building societies cut such deals from their offerings.

The mortgages will be available for first-time buyers from the group’s Lloyds Bank and Halifax directly, and via Halifax intermediaries, from Tuesday.

The maximum loan amount will be £500,000 and the maximum loan-to-income ratio will be capped at a multiple of 4.49. Newbuild properties will be excluded.

Lloyds, which is the UK’s largest mortgage lender, withdrew its 10% deposit deals at the start of the COVID-19 crisis and has since been offering only 15% deposit deals – meaning buyers have had to provide larger deposits to get on the property ladder.

Lenders across the UK increased the deposits due to concerns that house prices could fall in the wake of COVID-19, leaving some borrowers in negative equity. The threat of rising unemployment across the UK as the country remains in economic crisis has also increased the risk of home owners defaulting on their loans.

However, Lloyds’ new 10% deals will not be available to existing homeowners, unless a second applicant in a joint mortgage application is a first-time buyer. They will need a higher credit score and the deals will not be available beside schemes such as help to buy.

Jasjyot Singh, managing director of consumer and business banking at Lloyds Banking Group, said: “We are committed to helping people take their first step on to the property ladder and while there have been record levels of mortgage approvals over the past few months, raising a deposit is still hands down the biggest challenge for firsttime buyers.

“Higher LTVs ( loans- to-value) means we can support more people ready to get a foot on the ladder.”

Lloyds also relaunched a mortgage scheme which lets first-time buyers to borrow up to 100% of the mortgage if their family backs the repayments, The Guardian reports.

Several other big lenders have also announced plans to re-launch 10% mortgages. Nationwide building society is making 10% deposit loans available for house purchase and for existing mortgage customers looking to move home, as well as first time buyers from the second week of December. Yorkshire building society has also relaunched 10% deposit mortgages after withdrawing them in the summer.

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