The bank has introduced a series of new measures in the form of a range of new mortgages offering a total of £350 million worth of lending to borrowers who can only afford a small deposit. The new mortgages have a maximum loan-to-value (LTV) of 90 per cent and until the end of the year, £250 million of the total available has been specially earmarked for first-time buyers. The move by HSBC follows a similar policy initiated by Northern Rock in February, when the bank launched a range of 90 per cent mortgages. Northern Rock had previously restricted its LTV to a maximum of 85 per cent due to Britain’s economically straitened circumstances. Recent research has shown that first-time buyers have been largely neglected by the lenders this year, with the number falling to the lowest recorded levels since last November, as banks and building societies began concentrating their efforts on more wealthy mortgage-seekers. At the time, Richard Sexton of esurv, which conducted the research, said: “Even throughout the summer when banks increased their lending to meet short term targets and garner market share, high loan-to-value lending was still painfully depressed compared to pre-2008.” Thankfully this situation seems like it is now changing. Broker London and Country’s David Hollingworth told the Guardian newspaper that “The situation for first-time buyers wanting a mortgage is a gradually improving story. We are seeing more lenders lending to people with smaller deposits, even those with as little as 5 per cent.” However, the announcement of the new mortgages from HSBC was partially offset this week when Natwest pulled its own 90 per cent LTV mortgage from the market, which had an average five -year fixed interest rate of 5.89 per cent.
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