18 Dec 2018
First-time buyers often feel they're getting the short end of the stick financially when it comes to mortgage rates.
The high loan-to-value deals they are usually seeking are typically far more expensive than those lower down the scale.
But latest research from financial services company Moneyfacts shows that first-timers are actually coming out on top at present, as mortgage rates for those with a deposit of just 5% have hit a record low.
The average mortgage rate at 95% loan-to-value (LTV) on a two-year fix has fallen by 0.09% in the last month, down from 3.63% to 3.54%, which also marks a substantial reduction from this time a year ago when the figure stood at 4.15%.
Not only that, but the average has almost halved in the last decade – falling from 6.52% in December 2008 to today's record low.
At the same time, availability has notably improved, with 304 fixed-rate mortgages now available to those with a 5% deposit, up from 217 just a year ago – and an even more significant jump from the figure of only 17 in 2008.
Moneyfacts said this highlights how far the market has come, with lending to low-deposit borrowers almost non-existent in the wake of the worldwide financial crisis.
Lenders are now far more willing to operate in this sector, and are even more keen to help those with a slightly-higher deposit of 10%, where availability has hit a record high of 656 fixed-rate deals.
This figure compares to 650 a year ago and 102 a decade ago.
Darren Cook, a finance expert at Moneyfacts, said: "With first-time buyers being the lifeblood of the housing and mortgage market, it is encouraging to see that potential new homeowners now have a greater number of mortgage options available at the higher LTV tiers, as well as lower initial interest rates."
He said: "Competition between providers is serving to improve the market for low-deposit borrowers."
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