It was a five-year product with an interest rate of 4.99% and no product fees, and it replaced a previous 95% LTV mortgage which required substantial family assistance. The catch? It’s only available in six postcode areas in Wales.
Principality’s head of mortgages Christopher Johnson said the mutual was committed to offering the mortgage at the best possible rate to “people in our heartland”. He explained: “As a leading Welsh mutual that serves a community of members, we are committed to coming up with practical solutions to benefit Welsh people.
“The shortage of mortgage products realistically available to those with a low deposit has been a major stumbling block for first time buyers and we hope that this product provides an opportunity for them to own a high quality, affordable home.”
An increased willingness among banks to lend has been evident since the start of 2013. So far, brokers have benefited from the lending thaw in a patchy fashion.
Since the end of December, the number of 90% loan-to-value mortgage products available to intermediaries has risen by 7% to 181, compared to a rise of only 3% for those available direct.
However, the distribution of 95% loan-to-value products indicates a different trend. While the number available direct rose by nearly a quarter over the month, those available to intermediaries increased by only 13%.
Moneyfacts spokeswoman Charlotte Nelson said: “Since the launch of the Government’s Funding for Lending Scheme, the mortgage products at higher loan-to-values have increased slowly. This is not only the case for the direct market but the intermediary market has seen an influx in products too.”
“Although there is more choice on the market, these products are often restricted by area, limiting the amount of applications that can be made.”
Whether in the long-term competition around high loan-to-value products will reduce their exclusivity, in the short-term any 95% LTV product offers real relief for those lucky enough to be included in distribution. Your Mortgage Decisions director Martin Wade attributed Principality’s decision to restrict distribution in this way to a lack of resources and compared it to the national lenders’ technique of using mortgage clubs to keep a product exclusive.
“Anything that is 95% is good news for brokers,” he commented. “What a wonderful thing to see a local building society supporting its own market.”
