Barclays is to launch a groundbreaking 95% mortgage next Monday, with family savings in the bank acting as a guarantor.

The family savings must equal 10% of the purchase price. The money will earn base plus 1.5%. The savings will be returned with interest after the initial three-year term of the mortgage, provided the mortgage payments have been kept up to date.

The 95% ‘Family Springboard’ deal, aimed at first-time buyers, will be a three-year fix at 4.69%.

It means that a first-time buyer purchasing a home at £160,000 would need a 5% deposit of £8,000 and require a mortgage of £152,000. The family would have to put £16,000 into a Barclays “Helpful Start” savings account. The mortgage repayments would be £861.34 a month at 4.69% for the first three years, based on a 25-year repayment mortgage.

The Barclays product has been greeted as a ‘cattle prod’ which will get other high LTV products into the market, which might just kick other lenders into offering something similar or competitive.

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