A very interesting product was released today by Lloyds Tsb which shows two things. Firstly it has renewed my faith that lenders can still be innovative when the put their minds to it, and secondly that arguably this is a step towards lenders actively encouraging first time buyers back into the Market perhaps believing that house prices will begin to recover soon.

While there are a few conditions to this new mortgage product, they are far outweighed by the positives. 4.39% fixed for three years at 95% LTV is an exceptional rate and, presuming parents still have some spare cash floating around, will be a major fillip for certain first time buyers and therefore the market as a whole.

What’s clever about this product is that you can raid the Bank of Mum and Dad without leaving them high and dry — it’s about using capital rather than using it up, and the 3.5% fixed interest rate isn’t too bad at all in the current market. It’s effectively a 75% LTV mortgage parading as a 95% loan.

A word of caution: parents and grandparents need to understand that they don’t get their money back automatically after three years if property prices have fallen, although the general consensus is that we’re now at, or near, the bottom of the market.

Importantly, this is a clear sign that Lloyds TSB is backing the property market to recover.

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