Yorkshire Building Society has become the first lender to relaunch 5% deposit mortgages.

The new product, which is available at a borrowing rate of 3.99% with a £995 fee and free standard valuation, does not form part of the government’s new guarantee scheme.

The deal is available via Accord Mortgages, an intermediary-only mortgage lender of Yorkshire Building Society Group.

The building society’s 5% deposit mortgage will only be available to first-time buyers, whereas the government guarantee scheme is also open to all home movers.

Borrowers will only able to borrow a maximum of 4.49 times their income, while the maximum loan size is £500,000, and flats and new-build homes are not permitted.

According to Moneyfacts, there were just five products available at 95% loan-to-value at the start of this month, compared to 391 at the start of March 2020.

Jeremy Duncombe, managing director of Accord Mortgages, said: “As the first lender to launch a new 5 per cent deposit mortgage to the market, it’s important we balance demand with being able to offer the high levels of service brokers and clients expect. As such, this product may be withdrawn at relatively short notice, but we will continue to communicate our intentions proactively wherever possible.

“However, as more lenders join us in the 95 per cent LTV mortgage market, either with or without the mortgage guarantee scheme, we’re hopeful buyers with just a 5 per cent deposit will be able to benefit from a more sustained offering in the market.”

Duncombe added: “Part of our purpose as one of the UK’s largest building societies is to help people own their own home, and the unique challenges of the last year have made that harder than ever for some.

“Increasing house prices, the need to save for a larger deposit and limited choice in the higher LTV markets, means the goal posts have continually moved for many.

“We were one of just a handful of lenders that continued to offer 90 per cent LTV mortgages during the pandemic and have been monitoring the market closely to ensure we carefully broaden our support to those with even smaller deposits.

“This new 95% mortgage will give brokers another option to help clients with smaller deposits realise their home ownership ambitions.”