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One broker "baffled" as Coventry adds new 65% and 75% LTV products to first-time buyer range

Journalist: Riz Malik

ended 05. April 2024

Coventry Building Society has today launched new products to support first-time buyers.

Newspage asked brokers for their views on the new range, which offers a cashback incentive of £500 and now includes 65% and 75% LTV products with 2-, 3- and 5-year fixed rates (see screengrab below).

One broker said he was “baffled”, another added: “First-time buyer and 25%-35% deposit should not be used in the same sentence."

12 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
First-time buyers' frustrations are not going to be helped with 25%-35% deposit products in this market. Coventry may want to go back to the drawing board and work on higher loan-to-value products if they are eager to support first-time buyers, which I am certain they are.
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Darryl Dhoffer
Founder at The Mortgage Geezer
I'm baffled. Coventry Building Society have really pushed the boat out with this range of first-time buyer products — not. First-time buyers with a deposit of between 25%-35% are as rare as hen's teeth. Even if they weren't, I would expect lower rates that are reflective of today's swap markets, not inflated rates like these.
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Michelle Lawson
Director at Lawson Financial
I'm not sure how many first-time buyers have a 25%-35% deposit. I don’t see many of them. This is poles apart from Accord’s more realistic 1% deposit option released last week. Coventry are unusually a bit off the mark with this one.
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Justin Moy
Managing Director at EHF Mortgages
This feels like a misplaced range of products for first-time buyers, who typically have a smaller 5%-15% deposit for their first home. Whilst we normally praise Coventry Building Society for their 48-hour notice on withdrawn products, I am sure both borrowers and brokers will be confused by this move and it will require a re-think from their product team.
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Rohit Kohli
Director at The Mortgage Stop
We don't come across many first-time buyers with a 25% to 35% deposit so I'm not sure how these new rates will help the vast majority of aspiring homeowners. It's good to have more options out there but I think Coventry may have overhyped how much these new deals will help first-time buyers.
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Ken James
Director at Contractor Mortgage Services
The Coventry need to take of their blindfolds when thinking of ways to help First time buyers, if they believe a £500 cash back and £0 fee products are going to tip the scale in their favour and bring the FTB market flocking they will be sorely disappointed, for those FTB who have managed to save a 25% - 35% what is it about this deal that would incentivise them to go in that direction, a measly cash back - I think not. Against the backdrop of the £5000 deposit mortgage from Accord this feels like a feeble attempt to get some headlines, but I believe they will be disappointed with the market reaction. Such a shame as we really do Love the Coventry.
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Graham Cox
Director at Bridging Hub
There are cheaper rates available for first-time buyers with larger deposits. But Coventry are a particularly good lender for company directors, as they allow the latest year's net profit figure plus salary to be used for affordability — rather than restricting borrowers, as many lenders do, to an average of the last two year's figures, or just salary and dividends.
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Akhil Mair
Director at Our Mortgage Broker
A 35% deposit? Many first-time buyers will be turned off by such high deposit demands. Rising living costs and interest rates are adding to the challenges first-time buyers face, potentially making a hefty 25%-35% deposit a barrier rather than a stepping stone. Many young people may find themselves relying on the support of the "Bank of Mum and Dad" to bridge the deposit gap. Offering options for those with 5%-10% deposits could truly make a significant impact. Incentives such as cashback offers, free legal conveyancing, and valuation assistance could sweeten the deal even further, making homeownership more accessible and appealing.
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Jonathan Southgate
Founder at Sterling Southgate
This is disappointing form from Coventry Building Society and may as well read, “Lender puts clickbait product into the market to wind up first-time buyers with normal deposits”. A left field move from an otherwise pragmatic and supportive lender.
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Richard Jennings CeMAP
Founder & Managing Director at Richard Jennings Mortgage Services
I can't see there been a huge appetite for these products from first-time buyers. The incentive of cashback is unlikely to be a deciding factor when a deposit of 25% upwards is required. When lenders such as Accord are announcing mortgages with as little as £5000 for first-time buyers, this product launch from Coventry is a non-starter. It does, however, get them into the press and so has served its purpose of making headlines.
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Ying Tan
CEO at Habito
First-time buyer and 25%-35% deposit should not be used in the same sentence. Very few first-time buyers have a deposit this large, so it’s back to the drawing board for Coventry BS. We need to do more for first-time buyers, who are pivotal to a thriving property market.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
I've checked through all my files and, oddly, don't appear to have any first-time buyers with 25% or 35% deposits. These new products are niche in the extreme, as there are very few deals I see where a first-time buyer can purchase with a deposit of that level. Maybe if someone has the odd family gift or inheritance this may work, but the volume of business that these deals will appeal to is slim. In addition to that, with this level of deposit, these deals are pitching into an extremely competitive area of the mortgage market and there will be lots of other lenders offering remarkably similar priced deals.