First-time buyers are £2,000 a year better-off thanks to the surge in market competition‏

11th August 2015


First-time buyers have never had it so good as a result of mortgage providers cutting costs in a bid to attract borrowers.

The immediate aftermath of the financial crisis saw lending to first-timers almost collapse to nothing, with mortgages reserved for those who could stump up the cash for a hefty deposit.

However, research from shows that with more deals now available to first-time buyers, their monthly repayments can be reduced significantly. In fact this fierce competition has caused rates to drop significantly to the lowest on records.

Two years ago the number of deals available to those with a 5% deposit totalled just 42 but today there are a massive 195 deals on offer, with the best deal offering a rate of 3.49% – more than 2% down on the top deal available in August 2013, which carried a rate of 5.59%

A first-time buyer would be £2,005.68 better off in the first year by opting for the lowest two-year fixed mortgage today compared with the lowest rate two years ago.

Charlotte Nelson, finance expert at said: “It’s fantastic news that first-time buyers are finally seeing the improvement in the mortgage market that they have craved for so long, with the number of deals available to them increasing from 42 two years ago to 195 today.

“The launch of the Help to Buy Mortgage Guarantee scheme acted as a starting gun for this sector, making it almost acceptable to lend at higher loan-to-values again. Once these deals hit the market, other providers outside of the scheme had no alternative but to compete to attract customers.”

But Nelson advised that those looking for a 95% mortgage would be wise to look at the whole market instead of focusing on just Help to Buy, as better deals can often be found outside of the scheme. As an example, the average five-year fixed Help to Buy mortgage charges 5.12% today, whereas the average for those outside of the scheme is just 4.78%.

“However, borrowers will need to bear in mind that while they may be able to afford the mortgage deal now, with the Mortgage Market Review firmly in place they must prove that they can afford the mortgage after any base rate rises,” she added.


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