A small Massachusetts bank that already outhustles some big-name competitors in tony Essex County, outside Boston, is going after more market share with a new high-loan-to-value mortgage.

Ipswich Bank, which has $270 million of assets, made $210 million of purchase loans last year, ranking first in the area, ahead of such lending giants as Norwest Mortgage Corp. and Chase Manhattan Mortgage.

Now Ipswich is introducing a product that lets borrowers with good credit history take out a mortgage for 103% of their home's value.

The loan is targeted at savvy young buyers with good jobs and steady income, or investors who are loath to take funds from the stock market for a down payment, said Thomas R. Girard, senior mortgage officer.

The extra 3% enables buyers to pay for origination costs and insurance, he said.

The loan will also appeal to buyers looking to maximize their mortgage interest deductibility or invest in real estate in the quickly appreciating Essex County market, Mr. Girard said.

The loan is "not for everyone," Mr. Girard stressed.

"This is to reward the borrowers with very good credit," he said. "If you're just getting back on your feet, we're going to be cautious."

The new loan can be as large as $300,000-a necessity in Essex County's increasingly expensive real estate market. Home prices there have increased 10 to 15% in the past 24 months, Mr. Girard said. The loan is available with a 30-year fixed rate or a five-year adjustable rate. The adjustable- rate loan is tailored for first-time homebuyers who think they will move into a more expensive home in a few years.

Ipswich's average loan size is $186,000, Mr. Girard said, "substantially" higher than its competitors'. Borrowers need to have $70,000 to $100,000 in annual income to maintain a loan that size, he said.

The bank's small size-eight branches-gives it the ability to develop and implement new products faster than its big bank peers, Mr. Girard said.

Regulators have been leery of high-LTV loans, cautioning banks that they should not keep large amounts of these loans on their books.

Mr. Girard said that Ipswich is requiring its high-LTV borrowers to take out conventional mortgage insurance, reducing the risk. "Given the borrower's credit profile, there's no greater risk than with a conventional loan," he said.

Next up for Ipswich is the rollout of a Web site that's "a little ahead of the curve," Mr. Girard said. "We've really been studying how Internet banking affects the market," he said. "Our focus is to see how we can deliver in a real state-of-the-art fashion."

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