Today, Coventry Building Society has launched new products to support first-time buyers.
Newspage asked brokers for their views on the new range, which offers a cashback incentive of £500 and now includes 65% and 75% loan-to-value (LTV) products with 2-, 3- and 5-year fixed rates.
One broker said he was “baffled”, another said this “is disappointing form from Coventry Building Society”, while a third described it as a “non-starter.”
A fourth broker concluded: “First-time buyer and 25% to 35% deposit should not be used in the same sentence.”
A spokesperson from Coventry Building Society said: “We know the vast majority of first-time buyers will want higher loan-to-value options, which is why our first-time buyer range has products all the way up to 95%.
“These latest products sit alongside those options, and while they won’t be for everyone, some people will have a substantial deposit for their first home.
“Expanding our range of first-time buyer mortgages will allow those with a larger deposit to still qualify for £500 cashback when they move in.”
Reaction:
Darryl Dhoffer, adviser at The Mortgage Expert:
“I’m baffled. Coventry Building Society have really pushed the boat out with this range of first-time buyer products — not.
“First-time buyers with a deposit of between 25% to 35% are as rare as hen’s teeth.
“Even if they weren’t, I would expect lower rates that are reflective of today’s swap markets, not inflated rates like these.”
Riz Malik, director at R3 Mortgages:
“First-time buyers’ frustrations are not going to be helped with 25% to 35% deposit products in this market.
“Coventry may want to go back to the drawing board and work on higher loan-to-value products if they are eager to support first-time buyers, which I am certain they are.”
Ying Tan, CEO at Habito:
“First-time buyer and 25% to 35% deposit should not be used in the same sentence.
“Very few first-time buyers have a deposit this large, so it’s back to the drawing board for Coventry Building Society.
“We need to do more for first-time buyers, who are pivotal to a thriving property market.”
Rohit Kohli, director at The Mortgage Stop:
“We don’t come across many first-time buyers with a 25% to 35% deposit so I’m not sure how these new rates will help the vast majority of aspiring homeowners.
“It’s good to have more options out there but I think Coventry may have overhyped how much these new deals will help first-time buyers.”
Michelle Lawson, director at Lawson Financial:
“I’m not sure how many first-time buyers have a 25% to 35% deposit. I don’t see many of them.
“This is poles apart from Accord’s more realistic 1% deposit option released last week. Coventry are unusually a bit off the mark with this one.”
Jonathan Southgate, founder at Sterling Southgate:
“This is disappointing form from Coventry Building Society and may as well read, ‘Lender puts clickbait product into the market to wind up first-time buyers with normal deposits’.
“A left field move from an otherwise pragmatic and supportive lender.”
Justin Moy, managing director at EHF Mortgages:
“This feels like a misplaced range of products for first-time buyers, who typically have a smaller 5% to 15% deposit for their first home.
“Whilst we normally praise Coventry Building Society for their 48-hour notice on withdrawn products, I am sure both borrowers and brokers will be confused by this move and it will require a re-think from their product team.”
Graham Cox, director at Self-Employed Mortgage Specialist SEMH:
“There are cheaper rates available for first-time buyers with larger deposits.
“But Coventry are a particularly good lender for company directors, as they allow the latest year’s net profit figure plus salary to be used for affordability — rather than restricting borrowers, as many lenders do, to an average of the last two year’s figures, or just salary and dividends.”
Akhil Mair, director at Our Mortgage Broker:
“A 35% deposit? Many first-time buyers will be turned off by such high deposit demands.
“Rising living costs and interest rates are adding to the challenges first-time buyers face, potentially making a hefty 25% to 35% deposit a barrier rather than a stepping stone.
“Many young people may find themselves relying on the support of the “Bank of Mum and Dad” to bridge the deposit gap.
“Offering options for those with 5%-10% deposits could truly make a significant impact.
“Incentives such as cashback offers, free legal conveyancing, and valuation assistance could sweeten the deal even further, making homeownership more accessible and appealing.”
Ken James, director at Contractor Mortgage Services:
“The Coventry need to take of their blindfolds when thinking of ways to help first-time buyers, if they believe a £500 cash back and £0 fee products are going to tip the scale in their favour and bring the FTB market flocking they will be sorely disappointed, for those FTB who have managed to save a 25% to 35% what is it about this deal that would incentivise them to go in that direction, a measly cash back – I think not.
“Against the backdrop of the £5000 deposit mortgage from Accord, this feels like a feeble attempt to get some headlines, but I believe they will be disappointed with the market reaction.
“Such a shame as we really do love the Coventry.”
Richard Jennings CeMAP, founder and managing director at Richard Jennings Mortgage Services:
“I can’t see there been a huge appetite for these products from first-time buyers.
“The incentive of cashback is unlikely to be a deciding factor when a deposit of 25% upwards is required.
“When lenders such as Accord are announcing mortgages with as little as £5000 for first-time buyers, this product launch from Coventry is a non-starter.
“It does, however, get them into the press and so has served its purpose of making headlines.”
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management:
“I’ve checked through all my files and, oddly, don’t appear to have any first-time buyers with 25% or 35% deposits.
“These new products are niche in the extreme, as there are very few deals I see where a first-time buyer can purchase with a deposit of that level.
“Maybe if someone has the odd family gift or inheritance this may work, but the volume of business that these deals will appeal to is slim.
“In addition to that, with this level of deposit, these deals are pitching into an extremely competitive area of the mortgage market and there will be lots of other lenders offering remarkably similar priced deals.”
