Before the festive season began we saw that more banks and building societies were set to start offering mortgages under the Help to Buy scheme. Now that 2014 is here we have news of one of the largest lenders to enter the fray in this respect.

At the beginning of the New Year, Lloyds Bank has launched two mortgage opportunities to those who are looking to buy a new home. As with other Help to Buy opportunities, these products are designed to help newcomers to the housing market get onto the housing ladder. As the mortgages director at Lloyds Bank, Marc Page, has noted, the products will also help people move up the ladder from their first or second property.

Two options available from Lloyds

Lloyds is offering a two year fixed deal mortgage for a fee of £995. Those who have a Lloyds current account will get the best deal, at 5.19%. Those customers who do not have a current account with the bank will pay a higher percentage rate, at 5.39%.

There is also the option to apply for a Help to Buy mortgage that does not have a fee attached. As you might expect you will pay a higher percentage rate each month in this case. The annual rate is fixed at 5.59% for two years for those with a Lloyds Bank current account. Those without the account can still take advantage of the deal but they will pay the highest rate of 5.79%.

All the mortgages were made available to apply for as of 3rd January 2014.

Shopping around

The entry of Lloyds Bank into the marketplace shows that it is imperative that homeowners shop around for the best and most competitive deal. Rivals to Lloyds are offering the best rates at the moment, with HSBC coming out on top. Their rates are pegged at 4.79% over two years or 4.99% for five years. These also require a booking fee of £99.

The Lloyds mortgage requires buyers to get together 5% of the property price as a deposit. It will be interesting to see how well Lloyds performs in the scheme considering the higher rates it is attaching to its offers. No doubt some people will take advantage. The range of opportunities that now exist for people to buy their first and subsequent homes thanks to the Help to Buy scheme is more prevalent than ever before.

There is still some concern that the scheme could lead to a housing bubble akin to the one that started the recession several years ago. Some believe this is an unwarranted concern, while others are more cautious. Either way, with Lloyds entering the market now and Santander shortly to follow, the opportunities for potential homeowners to get on the housing ladder are better than ever before.

The Prime Minister David Cameron does not believe the scheme could lead to a housing bubble and says there is no need for concern. We shall be watching closely to see if he is right.

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