Those paying smaller deposits are paying over two thirds more than their higher deposit counterparts, the latest findings from the quarterly AmTrust Mortgage LTV Tracker.
AmTrust’s research has also shown that the average loan required by first-time buyers has gone up since the last quarterly tracker – up to £122,647 for those with 25% deposit and £153,353 for those with a 5%.
With average rates of 1.42% for 75% LTV and 4.02% for 95% loans, this means high LTV first-time buyers will pay 68.9% more than those with bigger deposits.
Pad Bamford, business development director at AmTrust Mortgage & Credit, said: “There has been some interesting movement in this iteration of the LTV tracker, not least the fact that more lenders have products available to those first-time buyers who are looking to purchase properties in excess of £200k, with only a 5% deposit.
“Last time we monitored this, there was just one two-year product available across all deals, however this has now jumped to 59 products, with another relatively big increase from five all term/all deal products to 150.
“This is good news and is perhaps a sign that annual targets are rearing into view, and lenders may be looking to first-time buyers in order to fill any void they might have.
“All in all, first-time borrowers with small deposits are nowhere near flavour of the month with lenders and therefore the trials and tribulations that come with attempting to get on the property ladder, still persist for many.
“The premium that has to be paid for high-LTV borrowers is significant and is likely to be putting large numbers of potential borrowers off when it comes to attempting a purchase. While we welcome an increase in product choice, there is a great deal of difference between offering products and writing business.
“We need to see the trend continue into 2018 and beyond if we are going to help more first-timers into their homes.”
This comes as Bank of England data reveals that a number of lenders have begun to inch prices upwards after speculation that the Bank’s Monetary Policy Committee could raise Bank Base Rate as early as November.