Northern Rock's first-time buyer mortgage obscures the real problem



First-time buyers who have struggled to get a mortgage have been given a glimmer of hope following the announcement that Northern Rock – the bank owned by UK taxpayers – is at long last offering a reasonably priced mortgage for those with a small deposit.


The bank will lend mortgages worth 90% of the property's value at a rate of 5.99% for two years, 6.49% for three years, and 6.59% for five years, with no product fee payable. Other lenders have been offering cheaper deals at a 90% loan-to-value (LTV) ratio for some time, but they tend to charge application fees of around £1,000 – a big sum for those battling to pull a deposit together.


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