Questions over whether Help to Buy 2 is more style than substance will be raised as another lender offers a cheaper 95% LTV mortgage outside the scheme.
Hanley Economic Building Society has launched a new two-year fixed rate priced at 4.89% to 31 December 2015, Moneyfacts says. This deal is available to first and second-time buyers who borrow between £30,000 and £400,000 at 95% LTV.
Earlier this month, Clydesdale and Yorkshire Banks launched a new 95% LTV first-time buyer deal at the slightly higher rate of 4.99%, quickly undercutting some of the loans announced under Help to Buy 2.
Clydesdale and Yorkshire's three-year fixed rate first-time buyer mortgage charging 4.99% to 95% LTV is 0.2% cheaper than the Halifax Help to Buy 2 two-year fixed rate at 95% LTV, priced at 5.19%.
It is also 0.5% cheaper than the five-year fixed rate from RBS and NatWest available through Help to Buy 2, which charges 5.49% at 95% LTV.
The rate is the same as the RBS and NatWest two-year fix, which also charges 4.99%.
Now Hanley has beaten them all with its two-year fixed rate priced at 4.89% to 95% LTV.
Help to Buy 2 has been a great success in whipping up interest in the property market, but that doesn't mean necessarily offers the best rates.
But this latest move also suggests that competition will grow in the high-LTV market, which could be good news for both borrowers and brokers.
Hanley's deal includes a £350 fee, which can be added to the advance of the mortgage. An incentive package of free valuation up to a maximum of £240 and £250 rebate is available.
This deal also has the added flexibility of being able to make overpayments up to 10% of the outstanding balance.
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