Today, Barclays Bank is opening its new 95% LTV Mortgage Guarantee Scheme products for applications.
The move follows on a new government-backed mortgage scheme to help people with 5% deposits get on to the housing. The government’s goal is to offer incentives to lenders, and bring back 95% mortgages which have drastically decreased during the pandemic.
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Barclays has announced some changes to its lending policy. Customers applying to borrow at greater than 85% LTV can benefit from a new maximum loan size on houses and flats.
For houses with a loan to value of more than 85%, the maximum loan has increased to £570,000. Meanwhile, for flats with a loan-to-value of more than 85%, the maximum loan has increased to £275,000.
“We are looking forward to supporting customers in their next steps as homeowners with the launch of two new 95% LTV products,” a Barclays spokesperson.
“These products are available under the government’s Mortgage Guarantee Scheme and are open for applications from [today].”
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By GlobalDataLoan-to-value (LTV) ratio is a number lenders use to determine how much risk they’re taking on with a secured loan. It measures the relationship between the loan amount and the market value of the asset securing the loan.
Higher LTV loans (or simply LTV loans) are considered higher risk loans.
Other high-street lenders have also signed up to the scheme
First announced at the UK Budget 2021, the scheme will help first time buyers or current homeowners secure a mortgage with just a 5% deposit to buy a house of up to £600,000 – providing an affordable route to home ownership for aspiring home-owners.
The government will offer lenders the guarantee they need to provide mortgages that cover the other 95%, subject to the usual affordability checks.
The scheme is now available from lenders on high streets across the country, with Lloyds, Santander, Barclays, HSBC and NatWest launching mortgages under the scheme today.
Virgin Money is due to follow next month.
Addressing inequality in the housing market
The government has made clear its commitment to tackling inequality in the housing market and levelling up the country. Official statistics show more homes were delivered in 2020 than in any year since 1987.
In 2019 a pledge to build 300,000 new and attractive homes a year was announced with an investment of over £12bn in affordable housing over the next 5 years – the largest investment in a decade.
Since 2010, more than 663,000 households have been helped into home ownership through government schemes, but when asked, 69% of private renters and 63% of those living at home who had looked into a mortgage said they cannot find many mortgages with a low deposit.
The government hopes today’s new 95% mortgage scheme will now make it even more accessible to own a home.
Housing Secretary Rt Hon Robert Jenrick MP said:
“For too many people, no matter how hard they work, home ownership can seem out of reach. One of the biggest divides in our country has been between those who can afford their own home and those who cannot.”
