Mike Regnier

The relaunch comes nearly a year after the coronavirus pandemic sparked a trend amongst banks and lenders which saw them withdraw low-deposit loans. Currently, there are only five 95% loan-to-value (LTV) mortgage products available compared with 391 in March 2020.

However, the 95% deal will only be available to first-time buyers and strict conditions will prevent lending for flats and newbuild homes.

This month’s Budget brought a government guarantee scheme to encourage lenders back into the low-deposit mortgage market, a move the chancellor Rishi Sunak said was to help generation rent become “generation buy”.

Although Yorkshire Building Society is not planning to use the scheme, it said it would not have returned to the market without it, because of the anticipated demand.

Last year, together with the handful of other lenders operating in the 90% mortgage market, the society was forced to manage demand, and on several occasions offered the loans for just two days at a time.

Yorkshire’s 95% deal will have a rate of 3.99% fixed for five years, and come with a £995 fee, The Guardian reports. 

Yorkshire Building Society’s chief executive Mike Regnier said he was confident the lender could shoulder the risk itself, without needing to fall back on government money. But he said it would not have re-introduced its low-deposit mortgage unless it knew others were about to join the scheme.

He said: “As the only lender in this market we’d struggle to meet the demand that clearly is out there for customers that have saved for years to get a 5% deposit, and will want to take every advantage of the stamp duty land tax holiday.”

The society has said it is not planning to restrict applications to certain days or time slots, but its strict criteria – which also excludes furloughed workers – is intended to reduce demand.

Mr Regnier added: “We’re trying to restrict, to an extent, the amount of demand that we get from it so that we can manage our service levels.”