Mortgage News

Although locking into a new mortgage deal can reduce monthly repayments, especially if the borrower is currently on the lender’s standard variable rate (SVR), it can result in having to pay additional costs. Mortgage borrowers looking to reduce the cost of locking into a new mortgage deal may want to consider a mortgage that does not charge a product fee, which on some deals, can add over £1,000 to the mortgage.

To help borrowers find the best mortgage deal that does not charge a product fee, below we’ve highlighted the lowest rates available on two and five year fixed deals that do not have any product fees in our remortgage, moving home and first-time buyer charts.

Although the interest rate is important when considering a mortgage deal, borrowers should be aware that the lowest rate available may not be the right option for their needs and, as such, should consider speaking to a mortgage broker to find the best deal of their individual circumstances.

A combination of rising house prices, mortgage lenders withdrawing deals for those with a 10% or less deposit, and savings rates at a historic low, resulted in potential first-time buyers facing a highly challenging market last year. Although the housing market still remains challenging for first-time buyers looking to take their first steps onto the property ladder, there does some to be signs that it is improving.

Here we take a look at what is happening in the first-time buyer market and how would-be homeowners can buy their first home in 2021.

First-time buyers with a 10% deposit now have more choice as the number of 90% loan-to-value (LTV) deals has increased month-on-month, research carried out by Moneyfacts reveals.

The data, which is due to be published in the Moneyfacts UK Mortgage Trends Treasury Report, found that the number of mortgage deals at a 90% LTV (which requires a 10% deposit) has increased from 88 on 1 December 2020 to 160 on 1 January 2021. In addition to this, the average rates on both two and five year fixed rate deals at a 90% LTV have fallen month-on-month. The average two year fixed rate at 90% LTV has fallen by 0.14%, down from 3.79% on 1 December 2020 to 3.65% 1 January 2021, and the average five year fixed rate at 90% LTV has fallen by 0.13%, from 3.92% to 3.79% month-on-month during the same time period.

While this is good news for many first-time buyers, as the below chart shows, the number of deals available to those with a 10% deposit is still significantly lower than those available at the beginning of March, before the pandemic began impacting the UK economy. As well as this, the average two year fixed deal rate at a 90% LTV is 1.08% higher on the 1 January compared to the 1 March 2020. Meanwhile, the average five year fixed deal rate at a 90% LTV is 0.88% higher.

The Halifax House Price Index, which was released today, shows that although the average house price increased during December 2020, house price growth has slowed to increase by 0.2% month-on-month. According to the index, the average house price now stands at £253,374. Although house price growth may be slowing, and could potentially start to fall as we move further into 2021, mortgage rates remain competitively low, making this a good time to lock into a new mortgage deal.

Below we have highlighted the lowest rates available in the mortgage charts, but mortgage borrowers should remember that the lowest rate may not be the best deal for their situation. Instead, when looking at mortgage deals, borrowers should consider a range of factors including product fees, incentives and flexible features, along with the rate, to determine the best one.