First-time buyers with just a 5% deposit will receive a boost from tomorrow (Wednesday 17 March) as Accord Mortgages becomes the first lender to return to the 95% loan-to-value (LTV) mortgage market ^† .

The intermediary arm of Yorkshire Building Society will launch the loans to give first-time borrowers with smaller deposits another option, in what is currently a very limited market.

The lender will not be using the government’s mortgage guarantee scheme for this product, and is launching a five-year fixed rate mortgage - exclusively to first-time buyers with a 5% deposit - as part of its continued support to help people get on the property ladder.

The new mortgage has a five-year fixed rate of 3.99% and comes with a £995 fee and free standard valuation.

95% Product Criteria

• Only available on 2nd hand houses – not available on flats, new build or properties in Northern Ireland
• Up to 4.49 times income
• Max term 40 years
• Max age at the end of the term is age 80
• Max loan size £500k

Jeremy Duncombe, managing director of Accord Mortgages, said:

Part of our purpose as one of the UK’s largest building societies is to help people own their own home, and the unique challenges of the last year have made that harder than ever for some.

Increasing house prices, the need to save for a larger deposit and limited choice in the higher LTV markets, means the goal posts have continually moved for many.

We were one of just a handful of lenders that continued to offer 90% LTV mortgages during the pandemic and have been monitoring the market closely to ensure we carefully broaden our support to those with even smaller deposits.

We expect this new 95% mortgage will once again give first-time buyers another option to help them realise their home ownership ambitions.

To qualify for the new five-year fixed rate mortgage, first-time buyers will be able to borrow a maximum of 4.49 times their income, ensuring prudent affordability. Flats and new build homes are not permitted, and the maximum loan size is £500,000. The products will initially be restricted exclusively via brokers, whilst the lender monitors demand and service levels carefully.

Jeremy added:

As the first lender to launch a new 5% deposit mortgage to the market, it’s important we balance demand with being able to offer the high levels of service brokers and clients expect. As such, this product may be withdrawn at relatively short notice, but we will continue to signpost our intentions wherever possible.

However, as more lenders join us in the 95% LTV mortgage market, either with or without the mortgage guarantee scheme, we’re hopeful buyers with just a 5% deposit will be able to benefit from a more sustained offering in the market.

^† Verified by Moneyfacts.co.uk as at 12.03.21 Accord will be the first residential mortgage lender offering new business 95% LTV mortgages, not linked to any schemes or restricted by location in England, Scotland and Wales.