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Things for first-time buyers may be starting to look up thanks to declining house prices and mortgage rates. Rates for 95% loan-to-value (LTV) two-year fixed mortgages have declined month-on-month since August 2018. With both the housing and mortgage markets showing favourable signs, now is likely a good time for those looking to purchase their first home.
Recent figures from Rightmove indicate that the housing market is moving toward a situation favouring buyers rather than sellers. Not only have house prices fallen by 0.2% this month, the first decline seen in 2019, but the average time taken to sell a home has increased to 62 days – the longest since 2013.
Furthermore, estate agents have more properties on their books now than at any time in the last four years – a situation that clearly illustrates competition is hotting up between sellers who are competing for interested buyers.
It seems that first-time buyers are already enjoying these market conditions. Nationwide Building Society’s House Price Index for May reports an increase in the number of first-time buyers, bucking the trend of all other buyer types. It is likely this increase is partly fuelled from the attractive mortgages rates currently on offer for those with a 10% or even a 5% deposit.
This increasing competition has seen reductions in mortgage rates up to the end of May, particularly in fixed rate mortgages. This has in turn made it more affordable for a range of mortgage hunters, but especially first time buyers, who often favour this type of product for the guaranteed monthly repayments it offers.
While fixed term mortgages are a good option for first-time buyers, borrowers might also want to consider a discounted variable rate mortgage. While these lack the security of a set monthly payment, their rates are, in many cases, cheaper. For those who are truly bamboozled by the idea of fixed rate and discounted variable rate mortgages, take a look at our beginner’s guide: What is a mortgage?
Moneyfacts.co.uk scours the whole market to find the best mortgage rates and deals being offered for first-time buyers. Currently, the lowest rate available to all with a 5% deposit is the Newcastle Building Society’s mortgage at 2.59% fixed to 31 July 2021, which then reverts to 4.49% at the end of this period. With a fee of £498, this product is for loans over £10,000 and overpayments are allowed. For those with a slightly larger/deposit/equity, looking for a 90% LTV mortgage, Loughborough Building Society’s discounted variable mortgage is topping our chart with a discounted variable rate of 1.74% (collared at 1.50%) for two years, after which it reverts to a rate of 5.34%. Borrowers will have to pay £999 in product fees and require a loan in excess of £25,000 – overpayments are also allowed. Take a look out our first-time buyer comparison charts or get ahead of the game with our collection of helpful mortgage guides
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