Skipton Building Society has introduced a deposit-free mortgage specifically designed for renters, requiring 12 months of on-time rental payments and a good credit history, but no guarantor. The interest rate is 5.49%, higher than the average five-year fix of 5%.
While 15 other zero-deposit products exist, they all need financial backing from family or friends. Skipton's deal fills a gap for those without savings or family wealth, according to chief executive Stuart Haire.
Generation Rent warns that the shortage of affordable homes remains the main barrier for first-time buyers. Will Barber Taylor said, "It's not necessarily going to help all the people who are looking to buy a first-time home if there aren't more houses available to buy."
First-time buyers face rising rents and the closure of the Help to Buy scheme in October 2022. Renter David from North Yorkshire said, "If I can prove I've been paying rent for the last 10 years of my life why can't I have a mortgage."
Mortgage expert Andrew Montlake noted that while high loan-to-value mortgages contributed to the 2008 financial crash, the current market is different, and such deals can work if "underwritten sensibly."
