Skipton launches deposit-free mortgage
By David Wood | 9th May 2023
A deposit-free mortgage specifically aimed at people currently renting has been launched by the Skipton Building Society.
While a handful of other no-deposit deals are available, they all need the financial backing of family or friends.
The Skipton says while its deal requires 12 months of on-time rental payments and a good credit history, it does not need a guarantor, the BBC reported.
However, at 5.49% the interest rate is more expensive than the average five-year fix of 5%.
Generation Rent, which campaigns on behalf of private renters, says the shortage of affordable properties within the budget of first-time buyers is still the main stumbling block for those struggling to get on the property ladder.
Currently there are 15 other zero-deposit products on the market, according to financial data firm Moneyfacts, accounting for just under 0.3% of the UK market.
First-time buyers are facing an uphill battle. Rapidly rising rents have made saving for a deposit increasingly difficult, at the same time that the government's flagship Help to Buy scheme, aimed at helping first-time buyers, is no longer open.
The Skipton, which is the UK's fourth biggest building society, says it recognised a "gap in the market".
Stuart Haire, the society's chief executive, told the BBC that "until now there has been no solution for them [renters] to buy a property due to a lack of savings or access to family wealth".
The government's Help to Buy scheme saw the Treasury lending homebuyers between 5% and 20% of the cost of a newly-built home, and up to 40% in London.
The scheme closed to new applicants in October 2022, but there are rumours that something along similar lines could be re-introduced.
But a rise in zero-deposit mortgages may not be welcomed by everyone, as riskier mortgages with a high loan to value were a root cause of the 2008 financial crash.
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