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First-time buyer mortgages at post-crisis high

First-time buyer mortgages at post-crisis high

Category: Mortgages

The forthcoming Moneyfacts UK Mortgage Trends Treasury Report reveals that the number of mortgages at 95% loan-to-value – ideal for first-time buyers – has increased substantially. Consequently, mortgage borrowers can now choose from over 300 products for the first time since April 2008.

Unusually, the number of 95% loan-to-value (LTV) mortgages has grown by 37 in just one month. Charlotte Nelson, finance expert at Moneyfacts, attributes this partly to eight lenders re-entering the market.

She added: "Providers know that many borrowers on their mortgage books, who are coming to the end of their mortgage, may want to take advantage of the low rates on offer elsewhere." As a result, providers need to stay competitive to keep first-time buyers interested. And first-time buyers can take advantage of this competition, so everybody benefits.

95% Mortgages Apr 08 Mar 17 Sep 17 Mar 18
Number of products 411 253 270 307
Average two-year fixed rate 6.39% 4.07% 4.16% 4.02%

As you can see from the table above, it's not just choice that's more competitive, as the average two-year fixed rate is still much lower than that seen at the start of the financial crisis. Indeed, Charlotte stated that "the average two-year fixed rate for a 95% LTV mortgage has fallen for five consecutive months to reach 4.02%."

While this average is still above the record low seen in January 2017, if you've only got a 5% deposit to buy your first home, it may still be a good time to take that big step onto the property ladder. In contrast, Charlotte reports that all the lower LTV mortgage numbers have decreased this month, with the additional exceptions of 90% and 75% LTV deals.

Overall, there's no time for complacency, as Charlotte said: "positive [mortgage] news should be seen as a call to action, with future base rate rises on the horizon." SWAP rates have been rising, and the three-month LIBOR has started to go up; these are pretty good indicators of a base rate rise occurring in the near future.

What next?

Charlotte concludes: "Borrowers should start considering their options now and act fast to get a good deal, to save significant sums in the long run."

So, why not have a look at our first-time buyer chart to see if there's a mortgage there to suit you? If you're already on the ladder, you might want to consider remortgaging before rates rise even more.

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.