First-time buyers have fewer mortgages to choose from at higher rates
There’s been a dramatic tightening in availability of mortgage products for borrowers with a small deposit, according to Moneyfacts.
The financial information provider said that 1,000 such deals have vanished over the past six months – including those at 90%, 95% and 100% loan-to-value (LTV), for borrowers with deposits of 10% of the property’s value or less.
There are now fewer than 100 deals left that cater for those with small deposits.
As a result of the limited availability of these first-time buyer-friendly mortgages, rates have been pushed up.
The average rate on a two-year fixed mortgage at 90% of the property’s value has risen from 2.57% to 3.54% over the past six months.
Moneyfacts added that the average deposit on a first-time buyer property is is now an eye-watering £47,000.
So, if aspiring homeowners started to save their deposit from scratch today, they would need to put aside around £780 every month for five years to save enough money for a deposit.
Rachel Springall, finance expert at Moneyfacts.co.uk, admitted: “First-time buyers may feel deflated to find a contraction in the market for higher LTV mortgage deals and to see property prices rise.
“Without the help from the Bank of Mum and Dad, it would not be surprising to see some prospective buyers put their plans on hold until more mortgage deals enter the market that they can comfortably afford.”