Although restricted to existing customers who need to move house, the UK's third largest mutual is to offer the controversial loans to customers in negative equity with an "excellent credit history".
Their existing loan will effectively be "ported" to the new property as no additional borrowing is allowed.
It follows a similar move by Nationwide Building Society, the largest building society in the UK and third largest lender in July.
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Borrowers in negative equity, with a home worth less than their mortgage, are commonly "trapped" in their homes and unable to move until they have paid down their debt.
There are about 900,000 homeowners in negative equity, according to the Council of Mortgage Lenders, the trade body.
Borrowers on higher loan-to-value deals have been hit by the slump in house prices, which has seen values slump by 25% from the peak in 2007 to bottom of the market earlier this year.
Nationwide allows existing customers to take out a home loan with a loan-to-value ratio of up to 95% on a three-year fixed rate of 6.73% or a five-year fix at 7.48 per cent.
It then allows customers to borrow an additional 30% at a rate of 7.23% and 7.98%.
Both moves are welcome news for the beleaguered construction trade as mortgage availability has been an enormous blockage to progress on increasing the number of new homes being built.
(BMcC/KMcA)
