Lloyds follows in the footsteps of HSBC, who recently announced that it had increased its first-time buyer lending pledge from £3bn to £4bn this year.
In the first six months of the year, Lloyds said it has helped over 25,000 people take their first steps onto the property ladder. It expects its lending pledge to help over 50,000 people buy their first home by the end of 2012.
Stephen Noakes, mortgage director at Lloyds Banking Group, said: “This commitment is not about paying lip service. It shows that we’re providing genuine solutions for people buying their first home. It’s important that we dispel some of the myths about first-time buyer mortgages. People can buy a home with a 10% deposit, or even 5% through the NewBuy scheme.
“Getting things right at the bottom of the ladder has an important knock on effect throughout the chain. With our unrivalled commitment to affordable housing, new build through Halifax, and innovative products such as Lloyds TSB’s Lend a Hand, we’re not targeting our support at a select few, but making home ownership a reality for a whole generation of buyers.”
Ben Thompson, MD of Legal & General Mortgage Club said: “This announcement has come at a great time for potential borrowers, and follows HSBC’s move to increase first-time buyer lending from £3bn to £4bn this year. Lloyds’ £5bn figure is the largest sum that has been openly pledged thus far.
“More lending in the mortgage sector is what we need to stimulate growth and increase competition, and whilst the announcement by Lloyds is a positive one, we need to see other lenders following suit to meet pent up demand.
“What we have seen up until now is limited help for borrowers with little equity, with the majority of lending going to those who are considered ‘low risk’. Solutions which will serve the wider market need to be implemented and although sensible lending is necessary, there needs to be a definite shift away from today’s risk-averse lending.
“We hope that the latest Lloyds announcement will encourage other competitors to lend to this group of first time buyers who have recently been underserviced.”
Halifax and Lloyds TSB last week refreshed their product ranges, reducing product rates including NewBuy and new build by up to 0.20%. From Friday, first-time buyers with a 10% deposit can also benefit from £1,000 cashback in Halifax branches.