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First-time buyers ‘must act fast’ to get top deals

The cost of servicing a mortgage for buyers with small deposits has fallen sharply over the past 12 months, according to the Genworth Moneyfacts LTV Tracker.

But would-be borrowers should act fast to snap up a competitive rate because of the risk of rising costs and a fall in the supply of high loan-to-value mortgages later this year, Genworth warned.

The research found that first-timer buyers who can afford deposits of only 5% or 10% of their property’s value are now making savings of £790 on average when compared with repayment costs 12 months ago. However, the high-LTV lending market is set to contract over the coming months as a result of the withdrawal of Help To Buy 2 as well as impending Basel capital requirements, Genworth’s Simon Crone said.

“Competitive rates available for those with just 5% or 10% deposits mean they are able to make huge savings compared to what they would have paid for the same loan in previous years,” he added.

“This is important for a group who face numerous challenges to enter the property market, typically facing far higher costs than those with the parental support to gather together a larger deposit.”

But Crone said that the current situation was unlikely to prevail. “All the evidence points to the fact we have seen just a temporary restoration of high LTV lending, and when HTB2 finishes at the end of the year, appetite for lending to those with small deposits will decline further and many more hopeful first-time buyers will be priced out unless they can secure help with a deposit.

“First-time buyers are crucial to the health of the wider housing market and failure to adequately support them will have a knock-on effect to other homeowners.”

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