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Banks launch 90% mortgage deals
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The mortgage market is slowly gathering pace, as lenders start trying to tempt first-time buyers back
First-time buyers and homeowners with little equity in their property should have more mortgage choice after Nationwide Building Society launched a range of home loans which only require a 10% deposit.
With mortgages available for loans up to 90% of a property’s value still in short-supply, this is a welcome move by Nationwide.
However, there is a catch: the building society will only consider offering you a 90% mortgage if you have one of its FlexAccounts. You must also pay in at least £750 a month and use it as your main current account. It’s also worth noting that Nationwide’s new mortgage range is only available direct via branches – the deals aren’t available via brokers.
Competitively priced
So is it worth taking opening a FlexAccount in order to take advantage of one of these new 90% deals?
cut home costs
Nationwide’s new fixed rates start at 5.98% for two years with a below-average fee of £495. Whilst this rate may seem high considering the Bank of England base rate is just 0.5%, the deal is market leading at this loan to value. Clydesdale and Yorkshire Banks, which are part of the same group, have a two year fix available for loans up to 90% at 5.99% with a £999 fee, while HSBC is offering a deal with the same rate and a £599 fee.
Borrowers who can afford to take a bit more risk with a tracker mortgage can benefit from a lower rate, but bear in mind that your repayments will rise if the Bank of England puts base rate up.
Again, Nationwide’s new deals are competitively priced. Its two-year tracker has a rate of 4.63% and a fee of £995 which is market-leading up to 90%. If you can scrape a slightly higher deposit together, Halifax has a two-year tracker at 4.44% which is available for mortgages up to 85%. The arrangement fee on this deal is also £995.
Another competitive option is HSBC’s lifetime tracker at 4.89%. This is a 90% deal and although the rate is slightly higher than Nationwide’s 4.63% product, it’s a long term deal and you won’t need to remortgage after two years. The fee on the HSBC loan is £999.
However, you will still pay a premium if you need to borrow 90% of the property’s value. The most competitive rates are only available to those with larger deposits. For example, if you have 40% to put down, HSBC is offering a lifetime tracker at 2.74%, with a £999 fee. If you’d prefer to lock in to a fixed rate First Direct has a two-year deal at 3.69% with a £498 arrangement fee. As with the HSBC tracker, a 40% deposit is required.
