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First-time buyers given mortgage hope

for-sale-signs1Lloyds Banking Group has committed £6.5bn towards helping first-time buyers get on the housing ladder by the end of the year. The bank said this was the largest sum so far set aside by a lender to help first-timers.

Lloyds, whose brands include Halifax, Bank of Scotland and Birmingham Midshires, expects the pledge to help about 60,000 people buy their first home in 2013. However, it indicated that the maximum it would normally lend to buyers taking out its core products will remain at 90% of the property’s value, although the group does offer some schemes where it will go up to 95% loan-to-value (LTV).

The announcement comes days after industry data revealed the number of mortgages taken out by first-time buyers reached a three-year high in November, with the exception of March 2012 when the end of the stamp duty holiday for these purchasers boosted activity.

Halifax has provided more than 40% of funding for the NewBuy scheme launched by the government in 2012, which is available to both first-timers and those moving home who can only manage a small deposit. It also claims to account for one in three mortgages on affordable housing schemes.

Aside from a few specialist deals such as NewBuy and Lloyds’s Lend a Hand mortgage, where buyers need a “helper” with savings of up to 20% of the property’s value, the Lloyds TSB and Halifax maximum LTV is 90%.

Lenders have been keen to attract first-time buyers of late. In November 2012 HSBC said it had approved £4bn of lending to those who had never bought before during the first nine months of that year, which translated into 33,000 people.

That same month Nationwide claimed it was responsible for almost one in five of all new mortgages to first-time buyers. It said it lent them £2.5bn in the space of six months, thereby helping about 20,000 borrowers buy their first home.

Barclays has recently introduced a new deal called Family Springboard, aimed at giving new buyers access to an affordable fixed-rate mortgage with a 5% deposit, provided their family opens a savings account linked to the loan into which they put 10% of the purchase price for three years.

Stephen Noakes, mortgage director at Lloyds Banking Group, said: While the property market is likely to continue to be challenging, we remain committed to getting things right at the start of the chain, creating liquidity in the housing market and helping more people get on to the property ladder in 2013.”

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