Santander Mortgages Offer First Time Buyers A New Hope With Higher LTVs

First time buyers are being offered a lifeline by Santander, which is to start lending higher loan to value mortgages on new-build properties.

The new home loans from Santander mortgages marks the first time that the lender has offered first time buyer mortgages for these types of properties since the financial crisis began, The Times reports.

Not only will Santander mortgages be opening its doors to this type of borrower, but offering higher loan to value mortgages will also make it easier for first time buyers to secure a foot on the property ladder by not requiring such a large deposit.

The maximum LTV for first time buyers of new apartments will rise from 70 per cent to 80 per cent of the property’s value, while for houses it will rise from 80 per cent to 90 per cent.

To put this in perspective, the deposit for a mortgage on the average new-build house price of £160,000 for a first time buyer will fall to £16,000, compared to £32,000.

Other buyers who are already on the property ladder will still only be able to borrow up to 70 per cent for apartments and 80 per cent for houses.

This move from Santander will offer hope to first time buyers who have been largely frozen out of the mortgage market for several years, and could also help to boost lending, which fell to a 10 year low in January.

According to the latest figures from the Council of Mortgage Lenders, gross mortgage lending plummeted 32 per cent in January, compared to December 2009, the lowest monthly total since February 2000, more drastic than the usual seasonal decline.

However, this followed a short sharp boost to mortgage lending in December before the stamp duty holiday came to an end in the New Year, the CML argues.Commenting on the figures, CML economist Paul Samter said:

“We remain in a period of uncertainty for the housing market and economy at large. The market certainly improved over the second half of last year and started 2010 in better shape than most would have predicted twelve months ago. More recent developments have been influenced by the end of the stamp duty holiday, and are likely to foreshadow a larger than usual seasonal drop off in activity in the early part of this year.

“However, the Bank of England is likely to keep rates low which should continue to mitigate mortgage payment problems and help cushion borrowers from the worst of the recession.”

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