theguardian.com
Newcastle Building Society Launches 98% Mortgage for First-Time Buyers
Newcastle Building Society introduced a new First Step mortgage allowing first-time buyers to borrow up to 98% of a property's price, addressing the challenge of saving for a large deposit, unlike the 52% who received parental help last year, according to Savills.
- How does this mortgage compare to other options available to first-time buyers?
- While other lenders offer mortgages at 90% or 95% LTV, with rates as low as 4.69% (Marsden Building Society), the First Step mortgage stands out by offering up to 98% LTV. This is significant for those struggling to save a larger deposit. The availability of 90% and 95% LTV mortgages is currently at a 17-year high, reflecting a broader trend of increased access to financing.
- What is the main impact of Newcastle Building Society's new 98% mortgage for first-time buyers?
- The First Step mortgage directly addresses the difficulty many first-time buyers face in saving for a substantial deposit. It allows them to borrow up to 98% of the property price, potentially opening homeownership to those who couldn't otherwise afford it. This could increase market activity among first-time buyers.
- What are the potential risks and considerations for borrowers using high LTV mortgages like this one?
- Borrowers using high LTV mortgages have lower equity in their homes, increasing vulnerability to price drops. If house prices fall significantly, they could face negative equity. Therefore, seeking expert financial advice before committing is crucial to manage potential risks and understand the long-term financial implications.
Cognitive Concepts
Framing Bias
The article presents a balanced view of the Newcastle Building Society's First Step mortgage, highlighting both its benefits and potential drawbacks. While it emphasizes the mortgage's accessibility for first-time buyers who haven't received parental assistance, it also includes expert opinions that acknowledge the risks associated with high loan-to-value mortgages and the importance of seeking financial advice. The inclusion of various perspectives prevents a solely positive or negative framing.
Language Bias
The language used is largely neutral and objective. Terms like "high loan-to-value" and "little equity" accurately describe the financial implications without emotional loading. While phrases like "get their foot on the property ladder" are common in real estate reporting, they don't significantly skew the overall tone.
Bias by Omission
The article could benefit from including data on the overall success rate of 95%+ LTV mortgages to provide further context on the risk associated with this type of lending. Additionally, exploring alternative solutions for first-time buyers beyond high-LTV mortgages would offer a more comprehensive view. However, these omissions are likely due to space constraints and the article's focus.