First time buyers are seizing the moment
Latest figures released by the Council of Mortgage Lenders have shown a 20% rise in approvals for first time buyer mortgages in June.
Moneyfacts research shows that the current average two year fixed first time buyer rate for borrowers with a 10% deposit is 6.15%, down from 6.48% six months ago.
For those fortunate enough to lay down 25% of the property value, the average 2-year fixed rate has reduced to 4.11% from 4.37% during the last six months.
Average 2-year fixed first time buyer rates
Aug-09 Jan-10 Aug-10
Average 2-yr fixed (max 90% LTV) 6.22% 6.48% 6.15%
Average 2-yr fixed (max 75% LTV) 4.68% 4.37% 4.11%
Average 2-yr fixed (max 60% LTV) 4.60% 4.49% 4.02%
Louise Holmes, spokeswoman for Moneyfacts.co.uk, said: “Potential borrowers dreaming of owning their first home will have been pleased with recent reports suggesting a fall in house prices.
“Mortgage lenders, however, see house prices continuingly falling as a threat and usually review their credit criteria by increasing deposit requirements.
“First time buyer mortgage rates have fallen over the past six months and it is understandable that they are using this as a window of opportunity.
“The fact remains that lenders will always offer a better rate to borrowers with a bigger deposit.
“First time buyers currently have to raise an average deposit of £44,030 for their first home. At this level, borrowers must surely be finding themselves reliant on the so-called ‘Bank of Mum and Dad’ to assist with raising funds.”