First-Time Buyer Market Sees Strong Start To 2021 | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 16/02/2021

The number of mortgage deals available to those with a 10% deposit has increased by 117 during the first six weeks of 2021, offering first-time buyers some positive news after many were locked out of the mortgage market during 2020 when lenders withdrew deals.

Our research has found that not only has the number of deals risen since the start of the year, increasing from 160 deals available on the 1 January to 277 deals on the 12 February, but the number of lenders offering mortgages to those with a 10% deposit – at a 90% loan-to-value (LTV) – has also increased from 32 to 47 during this same period.

“Options for those with a 10% deposit have improved greatly over recent months, with 15 more providers offering 90% LTV products since the start of this year, and the number of products themselves increasing by 117 since the beginning of January,” said Eleanor Williams, finance expert at Moneyfacts.co.uk. “This means that there is far greater choice for would-be buyers in this area of the market. There are also more cashback deals now available to first-time buyers with a 10% deposit too, increasing to 83 from 50 a month ago.”

Although, 2021 has been a good year so far for first-time buyers, the number of products available at a 90% LTV is still vastly down compared to a year ago, when there were 776 deals in the market. In addition to this, since the start of January the average two year fixed rate on a 90% LTV mortgage has increased by 0.09%, rising from 3.65% on the 1 January to 3.56% on the 12 February. First-time buyers considering a five year fixed rate deal will, however, be pleased to see that since January the average rate has fallen slightly from 3.79% to 3.68%. To find out if a two of five year fixed deal is the best option, read our story looking at whether borrowers should lock into a five year deal.

On the whole, despite the slight fall in average two year fixed rates at a 90% LTV, the first-time buyer market has made a strong start to 2021. Williams added: “There are of course still hurdles for these borrowers to overcome; house prices inflated quite significantly last year – although early indications are this may be slowing in 2021 – and savings rates have continued to descend to rock bottom lows, making building a larger deposit difficult, as have high rental payments. But their options have been steadily increasing, and added to the news that the homebuyers using the current Help to Buy equity loan scheme have a further extension on the deadline for completions, there is hope that 2021 may see more potential home-buyers take that first step onto the property ladder.”

To help find the best deal for their circumstances, first-time buyers should consider speaking to a mortgage broker who will be able to provide advice and support in choosing the right deal. As well as this, a mortgage broker will usually be able to help buyers through the mortgage application process – more information can be found reading our guide on mortgage brokers.

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