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Selling December 1, 2015

95% Mortgages come back to the market

95% Normal

The launch of the government’s Help To Buy Guarantee scheme in late 2013 gave much-needed help to buyers with small deposits.

The scheme gives an insurance policy to lenders (paid for by the government), to protect them against potential losses in the event of repossessing a high loan-to-value mortgage: with relatively little equity at the outset, the lender risks a much greater loss if things go wrong, and after the credit crunch they were naturally wary.

So before the launch of the Help to Buy scheme, borrowers with only a 5% deposit had very few options indeed. By bringing the guarantee into play, much bigger names were happy to join in with Halifax being both the biggest and the first out of the blocks but most of the high street soon joining in.

Nationwide has been a notable absentee in this, only offering 95% products to existing borrowers moving home. Until now.

In early September Nationwide finally launched a range of 95% products. They’ve always had a very strong reputation for movers and first time buyers, and the new deals are well placed compared to the other big names so this – coming with a £1bn lending commitment – is very welcome news.

And interestingly they’re doing it outside the government’s Help to Buy scheme. That’s due to finish at the end of 2016 anyway, but it’s encouraging that Nationwide feels confident enough to take 5% deposits with no extra security. They’re not the first to do this (Yorkshire BS and TSB, for example, both operate outside the guarantee) but are certainly the biggest.

At the same time, Santander have announced they’re taking their 95% mortgage products out of the guarantee, though this will be phased over time.

But with the end of the scheme still over a year away, it’s a very good sign that lenders are feeling confident enough to return 95% mortgages to a more normal footing.


Guild Mortgage Service, Provided by London & Country Mortgages


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