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First-time buyers have more mortgage choice!

First-time buyers have more mortgage choice!

Category: Mortgages

Updated: 13/03/2015
First Published: 11/03/2015

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

You may have noticed a shift in focus in the mortgage market over the last two years or so. Where it would once have been almost impossible to get a mortgage if you didn't have a sizeable deposit, now you can easily get one with a deposit of just 5% - in fact, these mortgages are becoming so widespread, that the number available has risen to the highest seen in almost seven years!

Growing confidence

It's great news for would-be homeowners, many of whom won't have been able to save a significant amount for a deposit. House prices have been rising, too, making anything above 5% even harder to amass. Luckily, there are plenty of mortgages available at 95% loan-to-value (LTV) – Moneyfacts' figures show that there are 195 of them available, the highest seen since May 2008 (when there were 204 on the market), just before the financial crisis really took hold.

This post-recession high suggests that the recovery is being keenly felt, with confidence seen on the part of providers as well as borrowers. During the financial crisis it would have been deemed too risky to offer a mortgage with a deposit of just 5%, but now, mortgage lenders are willing to lend at these higher risk levels. In turn, this shows how far consumer confidence has come, with affordability drastically improving and lenders being more certain that homeowners will be able to repay the loan.

Analysis suggests that Help to Buy has been the key driver behind this resurgence of mortgages for first-time buyers. The scheme encouraged mortgage providers to lend at 95% LTV, initially only among those who participated in the scheme, but other providers have since felt the need to compete in this sector of the market. It's a truly growing area, which can only be a good thing for borrowers, and in even better news, those mortgages are actually becoming cheaper.

More competition = lower rates

This desire to compete has driven down mortgage rates across the market, with the average fixed rate of just 3.06% marking another new record. However, this isn't only benefitting those with a larger deposit – in the last month the average rate for a two-year 95% LTV mortgage has dropped from 5.04% to 4.90%, meaning it could be a great time to consider taking the plunge.

Why not take advantage of things? Not only do you have more first-time buyer mortgages to choose from than you have done in years, but you'll be paying less for it, too. Check out our best buys to get started, and if you've got that deposit ready and waiting, you could be one step closer to buying that first home.

What next?

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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.