Santander Raises the LTV on First-time Buyer Mortgages

One of the largest banks in Great Britain, a Spanish-based Santander, formerly known as Abbey, announced that it will increase the maximum loan-to-value ratio available to the first-time buyers.
In an effort to boost activity in the first?time buyer mortgages market, Santander will raise the maximum LTV for those buying new apartments and new houses by 10%, to 80% and 90% respectively. Non-first-time buyers applying for a mortgage at Santander will enjoy the old loan-to-value ratio of 70% for new-build apartments and 80% for houses. The move, which will significantly improve first-time buyers? ability to purchase a property of their own, was welcomed not only by borrowers, but also by housebuilders, who have been struggling to sell 1- and 2-bedroom apartments lately. From now on, the deposit on an average first-time buyer mortgage required by the bank will fall to ?16,000, down from ?32,000. Experts of the mortgage industry are determined that a move by Santander can signify a renewed interest of lenders in first-time buyers, who have been practically excluded from the mortgage market in the past years. Let us remind that the last time Santander (then Abbey) had a 90% loan-to-value ratio on first-time buyer mortgages was 2 years ago (March 2008). Moreover, Santander demonstrated increased confidence in the market of new build apartments, which has been seriously struck by the economic downturn. Commenting on the new mortgage terms introduced by Santander, executive of the Home Builders? Federation said that the product should be highly demanded on the market as it is extremely competitive. It is important to note that the higher LTV introduced by Santander might help the UK mortgage recover from the double dip registered in the beginning of the year, when house transactions and lending fell by 30% and 23% respectively. However, some mortgage brokers believe that high LTV ratio on first-time mortgage deals offered by Santander might only boost competition on one segment of the mortgage market, since other lenders feature better LTV ratios on traditional mortgage products.