New 95% mortgages for first-time buyers launched: how can they compare?

First-time buyers can secure a home loan with only a 5% deposit from online-only lender Atom Bank, but exactly how do these deals match up against other 95% mortgages offered by high-street banks?

In March, the number of mortgages offered at a 95% loan-to-value ratio (LTV) hit a 10-year high. Now the online-only lender Atom Bank has joined the party by launching a new range of ‘digital mortgages’.

Here, we look at just how these deals compare well, and explain whether eye-catching offers from challenger banks would be the real deal – or too good to be true.


Atom Bank launches 95% mortgages

There is a growing number of choice for first-time buyers with a 5% deposit, with the quantity of available 95% mortgage deals reaching 307 in March – the greatest level recorded since April 2008.

Indeed, the spring saw HSBC, Barclays and Sainsbury’s Bank all launching new deals at this loan-to-value ratio.

Atom is now the most recent lender to be released fighting, with three new 95% fixed-rate products that offer lb500 cashback and mortgage relation to up to 4 decades.

The digital bank, which launched its first mortgage products last year, states have lent lb1.2bn to homeowners and smaller businesses so far.

But it’s worth bearing in mind that Atom Bank deals are ‘intermediary-only’ – meaning you’ll will need to go to a mortgage broker to access them.

Does Atom top the charts?

How perform the Atom Bank deals compare from the competition?

In the tables below, we’ve looked at the cheapest fixed-rate deals currently available at 95% loan-to-value, based on their initial rates.

Two-year fixed-rate 95% deals

Position Lender Initial rate Revert rate APRC Fees
1 Marsden Building Society 2.89% 5.95% 5.6% lb299 + 0.5%
2 Nottingham Building Society 2.89% 5.49% 5.2% lb999
3 Yorkshire Building Society 3.19% 4.99% 4.7% lb495
6 Digital Mortgages by Atom Bank 3.39% 3.75% 3.7% lb0

Three-year fixed-rate 95% deals

Position Lender Initial rate Revert rate APRC Fees
1 Marsden Building Society 3.29% 5.95% 5.5% lb299 + 0.5%
2 Clydesdale Bank 3.49% 4.95% 4.7% lb0
3 Loughborough Building Society 3.49% 5.09% 4.9% lb599
5 Digital Mortgages by Atom Bank 3.54% 3.75% 3.7% lb0

Five-year fixed-rate 95% deals

Position Lender Initial rate Revert rate APRC Fees
1 Digital Mortgages by Atom Bank 3.64% 3.75% 3.7% lb0
2 Clydesdale Bank 3.79% 4.95% 4.6% lb0
3 Yorkshire Bank 3.79% 4.95% 4.6% lb0

Notes: all mortgage data from Moneyfacts – accessed 23 May. Some deals are only available directly or through lenders. Items that are contingent on a guarantor (e.g. family mortgages) are excluded, much like deals that aren’t obtainable in a minimum of two UK countries.

As you can observe, the five-year deal from Atom is market leading by initial rate, while the two and three-year deals are competitive but don’t top the charts.

Where the Atom offers really win out, however, is in their revert rate (the speed you’ll be pushed on to when your initial term ends).

The bank’s low variable rate of 3.75% means that during the period of the entire mortgage term, each Atom deal is considerably cheaper than its rivals – with the overall cost to compare (APRC) arriving around 1.9% lower than your competition.

How important is the APRC?

The low APRC implies that overall the Atom Bank deals are the best over the long-term. However these calculations derive from your staying on a single deal for the whole mortgage term, that is something that not many people wind up better off by doing.

Revert rates can differ with time, and there’s no guarantee Atom won’t put theirs up down the line. Additionally, initial deal rates tend to be less expensive than most revert rates,

Overall, you might be better off remortgaging to a different deal at the end of your fixed term, prior to being managed to move on to a variable rate whatsoever.

Will these deals stick around?

When smaller brands launch such attention-grabbing deals, their is really a risk that the deal will be withdrawn fairly quickly.

In April 2022, Atom withdrew its market-leading five-year fixed-rate mortgage after just one week, when confronted with ‘huge demand’ from applicants.

This hasn’t just been the situation with mortgages, either. In September this past year, Atom cut the rates of their chart-topping fixed-rate bonds to ‘rebalance’ business following a rush of interest.

Could you save more to get a better deal?

If you feel it can save you more or aren’t in any rush to purchase your first home, far better offers are available to buyers who can put down a 10% deposit and acquire a 90% mortgage.

As the table below shows, borrowers can help to save around 1% on the best initial rates by having a bigger deposit.

Product type Lender Initial rate Revert rate APRC Fees
Two-year fixed Yorkshire Building Society 1.82% 4.99% 4.5% lb495
Three-year fixed Digital Mortgages by Atom Bank 2.14% 3.75% 3.4% lb900
Five-year fixed Digital Mortgages by Atom Bank 2.34% 3.75% 3.2% lb900

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