Bovis New Homes and Woolwich to offer 90% LTV mortgages

Woolwich will become the only major lender to offer 90 per cent loan-to-value deals to buyers of new-build houses and flats, it has been announced.

The mortgage lender, a subsidiary of Barclays, will offer competitive new mortgage loans worth up to 90% of a property's value, but only to people willing to buy a Bovis new-build home. The news is a major boost to first-time buyers and prospective purchasers with small deposits.

The Woolwich is offering a two-year fixed rate of 4.99%, reverting to a variable-rate tracker of 2.49% above base rate which is currently 0.5%. The loan is subject to a £999 arrangement fee.

The new home developer has set up an insurance company which will compensate Woolwich if it faces loses because a borrower defaults on their loan and is repossessed.
Jardine Lloyd Thompson, the insurance broker which has taken agreed to the terms of the arrangement, is reportedly now discussions with other new home builders and lenders who are keen to offer a similar deal.

David Ritchie, chief executive of Bovis Homes, said: "In the current market, the ability of purchasers, especially first-time buyers, to access high loan-to-value mortgage finance has been severely curtailed. Many of our potential customers are struggling to save the higher deposits required by the mortgage market today."

Andy Gray, head of mortgages for Barclays, commented: "We are now starting to see more competition and consumer confidence return to the market and we believe this gives the right level of rates with the security of a fixed rate deal for the first two years, ensuring that those with limited equity have the security of knowing what their payments are in the early years."