The Coventry Building Society has launched a new mortgage offer which suggests they are, in a small way, more confident in the future of the economic situation.

They are offering a 90% mortgage for first time buyers provided either they or their parents or guardians have held a savings or current account with Coventry for the last 3 consecutive years.

Effectively this means the offer is only available to existing customers or their children.

They are offering a fixed rate of 5.99% until 2014 to homebuyers with only a 10% deposit.

Besides the opportunity this provides prospective home owners, there are also a few extra cherries on top because the offer includes a free valuation (saving an average of £250), there is NO lenders arrangement fee (saving an average of £995) and they are even throwing in a £500 IKEA gift card!

This is a very attractive deal and is bound to help keep the housing market afloat for a small demographic but is 90% mortgage lending still risky business and is Coventry potentially putting their customers at risk of negative equity?

Ernst & Young Item Club recently published a report suggesting house prices will decline in 2010 and wont rise to their former 2007 level for another 5 years.

http://uk.biz.yahoo.com/13092009/399/house-prices-display-false-dawn.html

The offer from Coventry is fixed for 5 years so it should safeguard customers from a negative equity situation by the time the fixed rate expires.