Santander's 95% mortgage on new-build homes is boost for 'aspiring homeowners'

26 February 2024 , 08:37

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Buyers with a 5% deposit can choose from Santander's current five-year fixed-rate products (Image: PA Archive/PA Images)

Santander is set to offer 95% mortgages on new-build homes from Tuesday.

At the moment, the bank asks for at least a 15% deposit for new-build houses and 20% for flats. But now, both types of new-build homes will only need a 5% deposit.

Buyers with a 5% deposit can choose from Santander's current five-year fixed-rate products. Graham Sellar, who's in charge of development, mortgages said: "We know that saving for a deposit is one of the biggest hurdles for aspiring homeowners, especially for those juggling rental payments against trying to save."

David O'Leary, from the Home Builders Federation, thinks it's great news. He said: "Santander's introduction of 95% mortgages for new-build homes is extremely welcome." He also said how hard it is for young people to buy their first home.

However, Santander was one of several banks to increase some mortgage rates, blaming things like swap rates, which help them decide how much to charge for loans. HSBC UK also raised some of its mortgage rates on Friday.

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A spokesperson from HSBC UK said: "We're firmly focused on supporting customers to move onto or up the property ladder or renew their mortgage with us. There are several factors that are taken into account when setting mortgage rates, including swap rates which have increased and like other providers, we have had to reflect that in our mortgage rates. As a result, there have been increases to our residential mortgages. We continue to keep our rates under review."

Moneyfacts reported on Friday, the average two-year fixed residential mortgage rate on the market was 5.74%, rising from an average rate of 5.72% on Thursday. Also reported by Moneyfacts on Friday, the average five-year fixed residential mortgage rate on the market was 5.31%, up from an average rate of 5.30% on Thursday.

Lawrence Matheson