For the first time since July 2008, the society is offering buyers a 90% loan to value mortgage through its 51-branch network only, helping to reduce the pressure to raise a large deposit.
Principality mortgage manager Christopher Johnson said: “While the current financial climate has engendered greater mortgage affordability, the need for a larger deposit has presented a new hurdle for borrowers resulting in first time buyers being frozen out of the market.
“As a mutual building society, we recognise the plight of the first time buyer and although house prices remain vulnerable to setbacks, we believe the risk that borrowers will be left in negative equity has lessened – this has allowed us to cautiously re-enter the 90 per cent LTV market.
“Our prudent attitude to risk means that the new 90 per cent loan will be available to borrowers with good levels of affordability and clean credit histories.”
According to a Council of Mortgage Lenders (CML) report, house purchase lending fell a significant and unexpected 26% in January, owing to a lack of movement in the mortgage market as pressure on household budgets increases.
Peter Hughes, chair of the CML Cymru, commented: “Subdued lending conditions have manifested into lower numbers of housing transactions – especially for first time buyers who have been particularly hard hit by the need for sizeable deposits to raise a mortgage.
“The reality is that a flat mortgage market is likely to underpin 2011 as funding remains in short supply.
“The long term health of the housing market relies upon the revival of the first time buyer market and anything that lenders can do to help is welcome.”