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Lieke Braadbaart

Online Writer
Published: 21/02/2017
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The first snowdrops can be seen peeking out of the ground, we're finally able to enjoy the sun again on our way to work in the morning, and prospective first-time buyers are getting poised to start house-hunting, as spring is only a couple of weeks away. Lucky for them, our latest research shows that the number of available mortgage deals is still going up, and rates remain lower than years gone by.

More choice than ever before

The closure of the Help to Buy mortgage guarantee scheme had some worried that the number of mortgage deals available for those with only a 5% deposit would drop, yet our figures show that product numbers are still on the rise. Five years ago, prior to the scheme, there was a clear lack of competition for first-time buyers, who were seen as too risky. In February 2012, in fact, there were only 59 deals available at 95% loan-to-value (LTV), from just 24 lenders – 75% of which were mutuals.

Today, the number of deals has rocketed to 276 with 53 different lenders, including most of the largest high street banks. This is still up from February 2016, when the Government scheme was in full swing and the number of available deals stood at 253 (see table).

Maximum 95% Loan-to-Value Feb 2012 Feb 2016 Feb 2017
Two Year Fixed Average 5.93% 4.26% 3.98%
Five Year Fixed Average 5.89% 4.76% 4.43%
Total Number of Deals 59 253 276
Source: Compiled 14/11/2016

Better rates due to increased competition

The rise in competition has had the added effect of resulting in lower mortgage rates, as the table above shows. Rachel Springall, finance expert at Moneyfacts, reflects: "[T]wo and five-year fixed rates for those with a 5% deposit [have fallen] from 5.93% and 5.89% to 3.92% and 4.43% respectively over the last five years. Based on the average five-year fixed rate, that's a difference of £7,715.40 [based on £150,000 borrowed over 25 years, ignoring any other costs or fees] in terms of repayments during the first five years of the mortgage."

Not only that, but providers are competing with alluring incentive packages as well. For instance, the Best Buy deal from Hanley Economic Building Society, priced at 3.40% for two years, has an incentive package of free valuation and £250 cashback. Even the bigger banks are eager for first-time buyers' funds, with Barclays offering to pay up to £2,500 in cashback to reimburse the stamp duty charge on a £250,000 home.

Are you able to take advantage?

A large amount of choice and low mortgage rates are all well and good, but given house prices continue to rise, one negative for today's first-time buyers is that they have to build up a much larger deposit to get to the same 5%, and increased rent costs will not be helping them get to this goal.

There is still the Help to Buy ISA to consider for those saving up for a deposit, as well as the Lifetime ISA coming in April. Rachel says: "borrowers would be wise to be stringent with their daily finances, be on the lookout for the best mortgage deals and seek independent financial advice before entering into any arrangement."

What next?

If you're still getting your deposit together, have a look at the top savings accounts to see if the current interest rates can help you get there.

If you've already got your deposit and are ready to go, you can check out the top first-time buyer mortgages to see if any are right for you.


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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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