Huge win for home buyers as NatWest boosts the amount it will lend on new properties
The maximum loan it will allow on a house in terms of loan to value (LTV) is going up from 85 percent to 90 percent.
Banking giant NatWest is increasing the size of loans it will offer on new build properties in further evidence of a market revival.
The maximum loan it will allow on a house in terms of loan to value (LTV) is going up from 85 percent to 90 percent.
And the maximum LTV on flats is being pushed up from 75 percent to 85 percent.
The news follows decisions by a number of lenders, including NatWest, Barclays and HSBC, to reduce mortgage interest rates in recent days.
Banks and building societies are making the changes against the background of expectations that the Bank of England will reduce the base rate from the current 167 year high of 5.25 percent in the coming months.
Mortgage brokers and finance experts welcomed the increase in loan sizes, which will help first time buyers struggling to pull together a deposit.
Simon Bridgland, director at Release Freedom, told Newspage: "It's the hottest day of the year and the sun is shining on the new build sector.
"With NatWest giving borrowers an immediate increase of loan amount on new build flats by an extra 10 percent, and houses by an extra 5 percent, this is the perfect complement to their recent rate cuts.
"This is a massive boost to borrowers seeking to buy new homes and reflects the escalating market confidence we now have.”
Emma Jones, Managing Director at Whenthebanksaysno.co.uk, said the changes "are a sure sign that lenders have confidence in the economic outlook".
She added: "This week is like a repeat of the first week of the year when lenders were competing aggressively for market share.
"The second half of the year is shaping up to be the polar opposite of the first half, which has been relatively subdued overall. Hesitation has been replaced with hope.”
Adam Stiles, Managing Director at Helix Financial Partners, said: "Rates drops and increasing loan-to-values are a great sign of confidence in the mortgage market and we expect other lenders to follow suit with criteria tweaks."
Riz Malik, Director at R3 Mortgages, said: "Lenders are now competing not just on rate but criteria, and that's a huge win for borrowers.
"The good news is now coming in stereo. The loosening of criteria can be just as important as rate cuts to get this market moving.
"With enquiry levels for mortgages rising even without a base rate cut, this market seems to be more resilient than expected. It bodes very well for the second half of the year.”
Craig Fish, Director at Lodestone Mortgages & Protection, described NatWest's decision as a "very big move".
"For a big lender like NatWest to show support in this way reflects that the dynamics in the market are changing, with the popularity of new builds increasing," he said.
Ben Perks, Managing Director at Orchard Financial Advisers, said the new LTV deals are good news for first time buyers.
"Upping the loan-to-values available on new builds helps to lower the barrier for borrowers who are frantically trying to save for deposits," he said.
