A third lender has launched a 95% LTV mortgage to challenge the small number of disappointing rates available on the second phase of Help to Buy.
Hinckley & Rugby Building Society has launched a two-year discount mortgage through brokers charging 5.09%, undercutting Help to Buy 2 rates from both Halifax and NatWest.
The Society is able to offer a cheaper rate even though the high street giants benefit from a government guarantee, which throws doubts over how committed the big lenders are to the flagship government scheme.
The new deal falls short of the cheapest 95% LTV on the market, Hanley Economic Building Society's two-year fixed rate which charges 4.89% to 31 December 2015.
Earlier this month, Clydesdale and Yorkshire Banks also launched a new 95% LTV first-time buyer deal, which charges 4.99% to 95% LTV.
These rates are all cheaper than the Halifax Help to Buy 2 two-year fixed rate at 95% LTV, priced at 5.19%, and the five-year fixed rate from RBS and NatWest which charges 5.49%.
Although NatWest does offer a two-year fix under Help to Buy 2 at 4.99%.
Hinckley & Rugby's new deal is available to brokers as well as direct customers, has a £295 arrangement fee and £695 completion fee.
It also includes a free valuation and, like all Hinckley & Rugby mortgages, no early repayment charges (ERCs).
The 5.09% interest rate is a 0.55% discount off the Society’s standard variable rate. Overall cost for comparison is 5.7%.
Hinckley & Rugby chief executive Chris White said: “This 95% LTV mortgage is not part of the Government’s Help to Buy scheme, as we have our own insurance that covers us as a business when lending over 80% LTV.
“This 95% LTV mortgage will particularly help people buy their first home, but is equally appealing for anyone with a modest deposit who is looking for a good rate.”
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