Skipton Building Society has recently launched a new 100% mortgage product explicitly designed for UK renters looking to get on the property ladder.

Dubbed the ‘track record mortgage’, the product offers renters who can prove affordability for a mortgage and who have made 12 months of on-time rental payments the chance to borrow the full value of a property.

The 100% mortgage is available at a five-year fixed rate of 5.49% over a maximum term of 35 years.

While this is the first 100% mortgage to return to the market for some time, without family assistance, potential borrowers should proceed cautiously due to concerns over negative equity.

Skipton’s chief executive of home financing, Charlotte Harrison, said the product fills a “clear gap” for first-time buyers who do not have the benefit of family wealth or savings.

The housing affordability crisis in the UK has made it almost impossible for many people to get onto the property ladder. This is especially true for renters trapped in renting cycles and paying escalating rents, making it difficult to save for a house deposit.

Rental research from Skipton has shown that eight in 10 tenants feel ‘trapped’ in the rental cycle, paying higher rents than a mortgage, which prevents them from saving a deposit to buy their own home.

At the same time, house prices for first-time buyers have risen by an average of 18% in the last two years, an increase of £39,680.

The cost-of-living crisis is cited as the main setback for renters, who are now saving less for a deposit than ever before, with 41% stating house prices in their area are rising too quickly for them to keep up.

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Skipton has stipulated that the monthly mortgage repayment will be no more than the average of the borrower’s last six months’ rental costs. For example, a tenant paying an average of £800 per month in the previous six months will have a maximum monthly mortgage payment of £800.

Addressing concerns around negative equity, Harrison added that the product has been designed with this in mind, and borrowers can choose between a 100% and 95% loan-to-value.

While Skipton’s new mortgage product may not be able to help everyone, it is part of a solution for renters who are trapped in renting cycles and struggling to save for a deposit.

As a responsible lender, Skipton is offering innovation in this space to help turn generation rent into generation buy.

Harrison said, “We know there isn’t one quick solution to addressing this huge societal challenge of tenants being trapped in renting cycles, but doing nothing isn’t going to solve this UK housing issue.”