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First-time buyer deals near pre-crash levels

The number of high-LTV deals aimed at first-time buyers is almost back at pre-financial crisis levels.

Mortgages at 90% and 95% LTV all but disappeared after the crisis but have now hit the highest level since April 2008, according to new research from Moneyfacts.

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said borrowers with smaller deposits have benefited from schemes designed to support first-time buyers.


“The most effective has been the Help to Buy Mortgage Guarantee Scheme, which has made lending to small deposit holders socially acceptable again.”

Nelson said the increase in the number of high-LTV deals means that lenders aren’t just pedalling standard products.

“They are instead offering an array of incentive packages and fees, allowing borrowers to tailor their mortgage to their needs.

“This is a fantastic development for first-time buyers who had previously struggled to find an eligible deal let alone an attractive mortgage package.”

Nelson said competition in the overall mortgage market has seen rates plummet to record lows, including in the 90% and 95% LTV sectors.

“The average two-year fixed rate at 90% LTV has fallen from 4.27% two years ago to just 2.99% today – the first time the average has ever dipped below 3%.

“The average two-year fixed rate at 95% LTV has also dramatically fallen, dropping from 5.22% to 4.17% over the same period.

“So, not only can borrowers benefit from greater choice, but they can also profit from highly competitive rates.”

Nelson said borrowers should take advantage by making overpayments to increase their equity and reduce their outstanding balance, enabling them to get an even better deal when they remortgage in the future.”

Nelson added: “More choice can lead to more confusion, so borrowers need to look at the whole mortgage package and take financial advice before making a firm decision.”


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