The plight of first time buyers struggling to get on the housing ladder is being ignored as lenders continue to try to attract lower risk borrowers, new research from Moneyfacts.co.uk has revealed.
While the cost to lenders of funding mortgages has fallen by 4.35% over the past two years, borrowers with only a 10% deposit have seen the average two year mortgage rate fall by just 0.12% in that time. On a two year fixed rate mortgage of £150K, monthly repayments have fallen by just £11, from £988 to £977.
By contrast, rates for those with a 40% deposit have dropped 1.86% over the same period, representing a reduction of £165 per month, from £998 to £833.
Michelle Slade, spokesperson at Moneyfacts.co.uk, said that while the risk to lenders of a low deposit meant a higher margin was to be expected on such deals, the current levels seemed excessive and hard to justify.
"Sub-two percent rates are being advertised by lenders, but we have no way of knowing how many borrowers actually qualify for these deals. Having been tempted through the door, many are likely to be offered much higher rates.
"First time buyers, once seemingly the lifeblood of the property market, are now apparently being ignored as lenders continue to cherry pick lower risk borrowers. It appears borrowers searching out a new deal are paying a higher price to subsidise existing customers, many of which are paying record low rates."
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.