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First time buyers out in the cold

First time buyers out in the cold

Category: Mortgages

Updated: 22/09/2009
First Published: 22/09/2009

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 It is now over 6 months old so the content may be out of date.

The plight of first time buyers struggling to get on the housing ladder is being ignored as lenders continue to try to attract lower risk borrowers, new research from has revealed.

While the cost to lenders of funding mortgages has fallen by 4.35% over the past two years, borrowers with only a 10% deposit have seen the average two year mortgage rate fall by just 0.12% in that time. On a two year fixed rate mortgage of £150K, monthly repayments have fallen by just £11, from £988 to £977.

By contrast, rates for those with a 40% deposit have dropped 1.86% over the same period, representing a reduction of £165 per month, from £998 to £833.

Michelle Slade, spokesperson at, said that while the risk to lenders of a low deposit meant a higher margin was to be expected on such deals, the current levels seemed excessive and hard to justify.

"Sub-two percent rates are being advertised by lenders, but we have no way of knowing how many borrowers actually qualify for these deals. Having been tempted through the door, many are likely to be offered much higher rates.

"First time buyers, once seemingly the lifeblood of the property market, are now apparently being ignored as lenders continue to cherry pick lower risk borrowers. It appears borrowers searching out a new deal are paying a higher price to subsidise existing customers, many of which are paying record low rates."

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