Mortgages more accessible for first-time buyers
The biggest increase has been in the number of mortgages available at 80% loan-to-value (LTV) with a 76% rise since January.
There is also good news on the rate front, with the average rate for 90% LTV products dropping by 0.33% to 5.82% since January. The average rate available on loans up to 85% LTV has fallen by 0.96% to 5.02%; meaning a first-time buyer with a £150,000 mortgage at 85% LTV will now be repaying £878.63 a month, compared to £964.62 in January.
It is not all good news however, as the average rate for 95% mortgages has increased by 0.2%. Also, we have only seen a small increase in the number of products available in the 85, 90, and 95% LTV categories, which mean many would-be first-time buyers are still struggling to get onto the property ladder.
Clare Francis, site editor of moneysupermarket.com, said: “It’s encouraging to see the number of mortgages available for those with reasonably small deposits increasing, but there is still a premium on rates for loans available up to 90% discouraging many first-time buyers. The best rates are still only available to those with large deposits – you need at least 25% and in some cases 40% to qualify and this is pricing many out of the market.
“First-time buyers are integral to keeping the housing market moving – if there aren’t enough people jumping on at the bottom the market will eventually grind to a halt. A shortage of first-time buyers is evident around the country with many people struggling to sell their properties. Unless more lenders start offering 90% mortgages at affordable rates, it is difficult to see how this will be resolved. Increased competition would also help to push rates down, bringing the cost of mortgages available at high LTVs closer to the market-leading deals.
“Despite Base Rate having been left on hold at 0.5% again this month, an increasing number of economists believe interest rates will start rising sooner rather than later. Anyone thinking of buying for the first time may therefore be better off acting sooner rather than later as mortgages rates are likely to go up too. The housing market is also fairly subdued at the moment as the build up to Christmas starts, so it could be a good time to buy as sellers may be more than willing to negotiate on price.”