MAJOR banks have unleashed a wave of new five per cent deposit mortgages onto the market, to help first-time buyers and home movers.

The move comes as part of a new government-backed scheme unveiled by Chancellor Rishi Sunak in the 2021 Budget announcement. 

The Chancellor announced a “mortgage guarantee”, as he told MPs: “Lenders who provide mortgages to homebuyers who can only afford a five per cent deposit will benefit from a Government guarantee on those mortgages.

“I’m pleased to say that several of the country’s largest lenders including Lloyds, NatWest, Santander, Barclays and HSBC will be offering these 95 per cent mortgages from next month, and I know more, including Virgin Money will follow shortly after.

“A policy that gives people who can’t afford a big deposit the chance to buy their own home. As the prime minister has said, we want to turn generation rent into generation buy.”


Here is a round-up of what some of the banks involved in the scheme have said so far:

– Barclays 

Barclays has two new products under the scheme. It is offering a two-year fixed-rate fee-free deal on loans of between £25,000 and £570,000, with a rate of 3.99 per cent.

It is also offering a higher rate of 4.09 per cent for borrowers who want to fix their mortgage for a longer period of five years.

The products are available to self-employed applicants, who can be first-time buyers or existing home owners, and they can be applied for through a broker or direct with Barclays.

The products are unavailable on new-build properties.

A Barclays statement said: “We are looking forward to supporting customers in their next steps as home owners.”


HSBC UK has unveiled four new products under the scheme, some with a fee and some without. The deals are available to both first-time buyers and existing home owners.

They are a two-year fixed-rate deal at 3.99 per cent with a £999 fee, or one for the same period without this fee for a higher rate of 4.29 per cent.

Five-year fixed-rate deals are available at 4.29 per cent with a £999 fee, and 4.49 per cent without this fee.

HSBC said its maximum loan size available through brokers is £500,000. For direct customers it is £400,000, but it will be increasing this to £500,000 at a later date.

To qualify, the home must be the only property that mortgage applicants own and it will be their main residence. The property must not be a new-build or part of a shared ownership or shared equity scheme.

Michelle Andrews, HSBC UK’s head of buying a home, said: “After such a turbulent year it is great that this scheme will make a real difference in enabling first-time buyers who didn’t think they would have a chance of getting a mortgage and home movers to get the keys to their new home.”

– NatWest 

NatWest is offering a two-year fixed-rate mortgage at 3.90 per cent with no product fee.

It is also offering a five-year fixed rate at 4.04 per cent with no fee.

NatWest said its deals are available to both first-time buyers and existing home owners. NatWest’s lending criteria will include both employed and self-employed customers.

Properties classed as new-builds are excluded and the home must be valued at no more than £600,000.

The scheme has launched initially through NatWest’s direct mortgage channel, with intermediary channels to follow.

Miguel Sard, MD of home buying and ownership at NatWest said saving up for a big deposit can often be difficult for younger people and first-time buyers, adding: “And we know people in these groups are some of the hardest hit by the effects of the pandemic. A Government-backed scheme will help segments of the market for whom home ownership has felt far out of reach in recent months.”

– Santander

Santander will offer three deals with no product fee and a free valuation from Tuesday.

The three products, which are repayment mortgages for houses priced up to £600,000 or flats and leasehold properties up to £400,000, will be available to first-time buyers and home movers.

The mortgages will be a two-year tracker rate at 3.99 per cent, a three-year fixed-rate at 3.99 per cent and a five-year fixed-rate at 4.09 per cent.

The products available under the scheme cannot be used on new-build homes.

Customers can apply directly with Santander or via a broker.

Brad Fordham, head of mortgages at Santander said: “We know that buying a home is expensive and finding the money for a deposit and the up-front costs can sometimes prove a barrier to potential home owners.”

– Lloyds Banking Group

The group’s brands Halifax (including Halifax Intermediaries), Lloyds Bank and Bank of Scotland are supporting the scheme.

They have launched a two-year fixed-rate deal at 3.73 per cent with £999 fee or with a rate of 4.00 per cent for no product fee.

A five-year fixed-rate deal is also available at 4.00 per cent with a £999 fee or at 4.20 per cent with no product fee.

All products are available for loans of up to £500,000 over a maximum 40-year term to purchase existing properties. Products not available to purchase are new-build, shared equity, shared ownership, or Right to Buy property.

Andrew Asaam, mortgages director at the Lloyds Banking Group, said: “The mortgage guarantee scheme will be a gamechanger for those trying to raise a deposit while often paying rent at the same time.

“We support steps to help make home ownership a reality for more people and are offering 95 per cent mortgages through the scheme to both first-time buyers and home movers. We have also committed to lending £10 billion in 2021 to help people buy their first home this year.”