Homebuyers with only a 5% deposit to put down now have a wider choice of mortgage options to choose from following the launch of a new range of fixed rate mortgages from Coventry Building Society.
Coventry has returned to the 95% market for the first time in over a decade, having in recent years focused on offering mortgages to those with bigger deposits.
The new five-year fixed rate mortgages enable homebuyers to choose from lower rate deals with a £499 product fee, or higher rates with no product fee and £500 cashback included.
The maximum loan size is £400,000, even for first time buyers. The new mortgages are available both for purchases and further borrowing but not remortgages.
Home ownership on the rise
The growing number of mortgages available to homebuyers with only a 5% deposit to put down is great news for those who are struggling to save, perhaps because they are spending most of their disposable income on rent.
Not only are there more deals available, but rates for buyers with smaller deposits have fallen over the past year, making owning a home more affordable.
The Help to Buy equity loan scheme has also helped many first time buyers with small deposits to get onto the property ladder, with a recent English Housing Survey revealing that the proportion of 25-34 year olds who own their own home has risen after more than a decade of decline.
Separate data from Halifax shows that the overall number of first time buyers rose by 1% last year, up from 353,130 in 2018 to 356,767 in 2019. First time buyers continue to account for more than half of all home purchases.
Russell Galley, managing director of Halifax said: “Given their importance to the market as a whole, it’s reassuring that the overall number of new buyers getting on the ladder remains stable.
“This is in part explained by initiatives designed specifically to support this key group, including Help to Buy schemes and family support mortgages, and they also benefit from the continued period of record low interest rates. However, it’s clear that more needs to be done to address more fundamental long-term issues, not least the shortage of new, affordable homes being built.”
More mortgage options for buyers with small deposits