Just as their latest house price index shows that prices have fallen marginally by 0.2% in April, Nationwide Building Society is set to offer potential first time buyers access to a 95% loan to value mortgage as of Friday 6th May.
Nationwide say that their three month comparison showing a small increase of 0.6% is a better indicator of the house price trend. But then go on to say that they expect house prices to remain static or even drift down slightly in the coming year.
“There is still little evidence to suggest that price declines will accelerate in the months ahead. While the UK economy only managed a modest bounce-back at the start of the year, after the weather-induced contraction in late 2010, the economic recovery is expected to gather momentum.” the report said.
Given that the Nationwide is set to offer FTB the chance to get one of their 95% mortgages through a scheme to be launched this Friday.
Potential FTB will be able to open a ‘Save to Buy’ savings account and, after saving £50 regularly for at least six months, be able to apply for a 95% LTV mortgage. The account is expected to offer a 2.5% gross savings rate on balances up to £20,000 and cash back rewards may apply.
But FTB need to realise that this deal in no way guarantees them a mortgage. It is simply a doorway, which can only be opened with the usual, now more stringent, credit, status and income checks.
But is is an attempt by a lender to reintroduce the old common sense premise of proving you can regularly put money aside before they will consider your mortgage application.