Fall in the cost of 5% deposit mortgages
Average two and five-year fixed rates for those borrowing 95% of the property’s value have fallen, according to Moneyfacts.
The financial information provider said that low deposit deals have bucked the recent trend of rate rises.
It found that the average two-year fixed rate at 95% LTV has fallen from 4.11% at the start of the month to 4.06% today, while the five-year fixed rate is now priced at 4.43% after a 0.06% drop.
Both rates are now lower than they were at this time last year.
Charlotte Nelson, finance expert at moneyfacts.co.uk, said: “This is great news for first-time buyers, especially as they often bear the brunt of any rate rises in the market. Competition in this sector is high particularly among lenders looking to revitalise their mortgage book by bringing new borrowers on board.”
It is not just rates providers are using to attract these new borrowers, said Moneyfacts, highlighting an array of different incentive packages and fees that enable borrowers to tailor their mortgage to suit their needs.
But Nelson added that 95% mortgages were still more expensive than those for borrowers with a greater deposit: “By saving an extra 5% for a deposit, first-time buyers will still be significantly better off. To illustrate, the average two-year fixed rate at 90% LTV stands at 2.74% today – meaning borrowers who can save the extra 5% could save a whopping £141.82 a month (based on a £200,000 25-year mortgage).”