Lloyds Bank is launching a 100%, no deposit mortgage fixed for three years at 2.99%. But there’s a catch – the borrower must have a family member willing to stump up 10% of the maximum £500,000 loan as security and lock it away in a fixed rate savings account for three years.
Prior to the financial crisis in 2008 100% (and more) mortgage deals were quite common but these subsequently dried up as minimum 75% mortgages became the norm. However, over the last couple of years the number of 100% mortgages on the market has been slowly increasing. Barclays, for example, already offers a similar product called Springboard.
Vim Maru, group director of Lloyds Banking Group says: “We are committed to lending £30bn to first time buyers by 2020 as part of our pledge to help people and communities across Britain prosper – and ‘Lend a Hand’ is one of the ways we will do this.
“At the heart of this market-leading product is helping to address the biggest challenge first-time buyers face getting on to the property ladder, while rewarding loyal customers in a low-rate environment.”
No doubt there will be some borrowers who are attracted by Lloyds’ new found sense of largesse. Others might feel it is simply a way to drum up business in a market where the number of first time buyers with a deposit large enough to buy the average house is in short supply. Holding on to £50,000 of a family member’s life savings should certainly lend a hand in cushioning Lloyds’ risk.