A NEW zero deposit mortgage that can help renters onto the property ladder has been launched UK-wide in a “genuine milestone” with brokers predicting “2026 is the year of the first-time buyer”. Though one urged caution and another warned that political instability could mean rates increase again later this year.
Melton Building Society (BS) has released a 100% loan-to-value (LTV) mortgage product designed to help first-time buyers overcome the challenge of saving for a deposit.
After a successful trial in the East Midlands, the product is now available UK-wide.
The 5-year fixed-rate product is priced at 5.99% and comes with a £199 application fee and £199 cashback on completion.
Simon Taylor, CEO of Melton Building Society, said: “It’s well documented that in recent times taking the first step into home ownership has become increasingly difficult for buyers.
“As a modern mutual building society, it’s important that we look for ways to innovate and offer solutions to overcome the barriers that exist to home ownership.
“That’s why we’ve carefully designed a product, that in partnership with Gable Sure, gives borrowers a fair opportunity to own their own home, whilst lending responsibly.”
The year of the first-time buyer
Kylie-Ann Martin, Director at Selby-based KAG Financial, said first-time buyers are benefiting from so many options.
She added “2026 is lining up to be the year of the first-time buyer – and rightly so. After a few years of wobbly rates, rising rents and a lack of low deposit options, lenders have listened to the marketplace and that combined with a rate war is a great thing for buyers.
“Having been in the industry 17 years, I can’t remember a time when so many different options were available for those with smaller deposits, even for those without the perfect squeaky clean credit rating.
“We are speaking to many buyers that have been putting off looking at their options due to higher rates, and now they are in a much better place – many first-time buyers plan on making 2026 the year they become homeowners.”
Patricia Ogunfeibo, Founder & non-practicing Solicitor at London-based tenant2owner, said renters will be delighted with the product.
She added: “This is exactly what tenants need to hear – another more accessible mortgage. Melton expanding its 100% LTV mortgage nationwide is a genuine milestone. For a lot of the tenants I work with, the deposit barrier is the biggest obstacle to homeownership.
“That upfront lump sum when coupled with unavoidable buying costs is sometimes just too much for them. Melton is doing what building societies were created to do, and a simple check using our ‘rent vs buy’ calculator will help the individual see if paying the 5.99% rate makes good sense for them, or not.
“If you’re a tenant, talk to a whole-of-market broker, because you could be closer to owning than you think. The deposit gap isn’t a character flaw, it’s a structural problem. And it’s great to see Melton helping to close it.”
This is exactly what tenants need to hear
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said it was a “nice option”.
He added: “The Melton BS option is another 100% no-deposit option for borrowers who are struggling to save for a deposit but have a good income.
“With decent pricing, low fees and a free valuation, it’s a nice option for those who also don’t have any family home collateral to offer.”
Craig Fish, Director at London-based Lodestone Mortgages, did urge caution.
He added: “Melton BS launching a UK wide 100% LTV is notable. It signals continued appetite to support first-time buyers, albeit from a smaller lender.
“Encouraging? Yes. Reckless? Not necessarily, but underwriting will matter.”
Keep an eye on the political situation
Simon Bridgland, Broker at Canterbury-based Charwin Private Clients, said he hoped it would encourage more into the market.
He added: “There have been a number of fat carrots dangled in front of the borrowing public in the last few days. Hopefully enough to tease the spring market into action.
“Notably, Melton BS offering a previously limited 100% mortgage, to the wider nation. Let’s hope the market becomes more of a stallion rather than making an ass out of the hopeful first-time buyer.”
Steven Greenall, Mortgage and Protection Advisor at Rayleigh-based Protect & Lend, predicted that political instability could eventually lead to higher mortgage rates.
He said: “Lenders are increasing their loan to income ratios and for those with certain eligibility factors can also consider 100% mortgages. However, keep an eye on the political situation as the Prime Minister will remain under pressure going into the May local elections.
“If bond yields start edging up again which they are likely to do if Angela Rayner and Ed Milliband get close to taking power, this will put pressure on swap rates leading to higher mortgage rates once again. Irrespective of whether the economy needs lower rates or not, the political situation may lead the Bank of England to reconsider its current lowering stance.”
