Hope for first-time buyers as number of 90% LTV deals rises

The number of mortgage deals available for those with a 10% deposit has increased by 25 during November and is now at its highest level since the 1 June 2020.

Today there are 81 mortgage deals available at a 90% loan-to-value (LTV) – a LTV that requires a 10% deposit to apply for and is usually aimed at first-time buyers. This is an increase of 25 deals since the 1 November 2020, when the number of 90% LTV deals stood at 56. As well as this, as the below table shows, since the 1 October 2020 the number of 90% LTV deals has steadily increased and now stands at its highest level since 1 June, when there were 183 deals available.

While the number of 90% LTV deals available is rising, those looking to buy a property with a 10% deposit should still be aware that the market is still challenging and there are currently 698 fewer 90% LTV deals available in the market today than there were on the 1 March 2020. As such, first-time buyers looking to buy a property with a 10% deposit should consider speaking to a mortgage broker, who will be able to assess all the 90% LTV deals in the market to help decide the best deal for the borrower’s circumstances.

In addition to the number of 90% LTV products rising, November has seen average rates on two and five year fixed deals at a 90% LTV fall. On the 1 November 2020, the average 90% LTV on a two year fixed deal stood at 3.76%, which has since fallen by 0.08% during the month to stand at 3.68% today. Meanwhile, the average five year fixed rate on a 90% LTV deal was 3.98% on 1 November 2020, which has decreased by 0.16% to stand at 3.82% today.

Although buyers with a 10% deposit will have seen their choice of deals increase during November, those with a 5% deposit now have fewer deals to choose from. On the 1 November 2020, there were 12 deals available at 95% LTV, which requires a 5% deposit, this fell to just eight available on the 30 November 2020. In fact, the number of deals available at a 95% LTV have consistently fallen or remained the same month-on-month since 1 August 2020, which could signal that lenders are nervous that house prices will fall next year and are therefore reluctant to lend to those with a small deposit.

As first-time buyers looking to get onto the property ladder with a 5% deposit have so few deals to choose from, they may want to consider waiting to increase their savings so that they can offer a 10% deposit on a property. Alternatively, first-time buyers can consider using the Government’s help-to-buy equity loan scheme to boost their deposit.