Skipton to offer 100% mortgages, first since 2008

Skipton Building Society announced it plans to launch a 100% mortgage aimed at potential first-time buyers who cannot save for a deposit — the first 100% mortgage since the 2008 financial crisis.

“In an industry first, Skipton Building Society is handing a lifeline to tenants across the country, to help them break out of their trapped rental cycles and onto the property ladder for the first time, with the launch of its Track Record Mortgage,” said Skipton in a statement.

The mutual said its Track Record Mortgage “will enable renters to access the property ladder without a house deposit taking away the dependency on the Bank of Mum & Dad or guarantors.”

It said tenants who can “evidence affordability for a mortgage and have a strong track record of rental payments” can borrow up to 100% of a property value with this new five-year fixed rate mortgage.

Skipton’s Track Record Mortgage product details include:

  • 5-year fixed rate product at 5.49% over a max term of 35 years
  • Tenants can borrow over 95% up to 100% loan to value
  • Available to tenants aged 21 and above
  • Available for first time buyer purchases only
  • Subject to affordability and credit score, plus evidence of a minimum of a 12-months good track record rental history

Skipton said it anticipates high demand for the Track Record Mortgage, warning that it may sell out quickly.

“There are 4.6m households renting privately across England, which is more than double (+112%) the number recorded in 2000 …” said Skipton.

“Rental research from Skipton exposes how eight in 10 tenants feel ‘trapped’ in the rental cycle, paying rents that are higher than a mortgage which then prevents them saving a deposit to buy their own home.

“At the same time house prices for first time buyers have risen by an average of 18 per cent in the last two years, an increase of £39,680.

“The cost-of-living crisis is cited as the main setback for renters, who are now saving less for a deposit than ever before, with 41 per cent stating house prices in their area are rising too quickly for them to keep up.

“More than one in three (35 per cent) are struggling to save due to increased rent – and are now having to find an extra £1,000 per year for their landlord.

“Skipton’s Track Record Mortgage will enable people trapped in these rental cycles who are prevented from saving for a house deposit, to access the property ladder and make a home their own.

“As a responsible lender, Skipton is ensuring that the buyers will not be paying more on a monthly basis than what their current rent is.”

Charlotte Harrison, CEO of Home Financing at Skipton, said: “We need to tackle the UK’s housing affordability crisis to enable more people, especially renters who are trapped in renting cycles, to buy their first home.

“People trapped in renting is one of the UK’s biggest housing challenges, having a massive impact on the fabric of our society.

“With escalating rents and the cost-of-living squeeze further impacting people’s ability to save for a house deposit – it’s making it almost impossible for people get onto the property ladder.

“We recognise there’s a clear gap in the market for people who have a strong history of making rental payments over a period of time so can evidence affordability of a mortgage – but there is currently no solution for them to buy a property due to lack of savings or access to family wealth.

“It is time for a re-think on these massive barriers to home ownership, and we’re proud to take the lead on bringing to the market, solutions for such a massive social problem.

“This is why we’re introducing our Track Record Mortgage. It has been carefully created with the challenges generation rent is facing in mind, together with the potential risks and challenges they may encounter in the future too.

“In building our mortgage product with these challenges at the centre we’re ensuring considerations around negative equity have been fully taken into account …

“We know there isn’t one quick solution to addressing this huge societal challenge of tenants being trapped in renting cycles, with rents escalating faster than mortgage payments and the increasing costs of living, but doing nothing isn’t going to solve this UK housing issue.

“As a responsible lender, we need to be sensible with our approach for bringing this product to the market and ensure tenants don’t take on more than they can realistically afford.

“We know this product will not be able to help everyone and is only part of the solution for this group of people, but as a lender, we’re taking a stand to offer innovation in this space to help turn generation rent into generation buy.”