Good news for first-time buyers as lenders offer more low deposit mortgages
Lenders are returning to the first-time buyer mortgage market, according to Defaqto.
The financial information experts found that, in the past three weeks, three high street lenders have returned to this sector of the market – HSBC, Nationwide and Metro Bank.
A total of 10 new fixed rate mortgage products have been launched for first-time buyers with a 10% deposit over the same period, taking the number of higher LTV fixed rate products to 28.
This is great news for first-time buyers who typically have very small deposits, usually 5% or 10% of the purchase price and need these high loan to value (LTV) mortgages to borrow 95% and 90% of the purchase price.
Many of these products were pulled from the market during the height of lockdown in April but, in recent weeks, lenders have begun cautiously returning with high LTV loans again.
Short and sweet deals
But first-time buyers need to be quick.
Defaqto also noted that lenders are still very cautious, and many of these products are only made available for a few days and then pulled from the market again.
Katie Brain, banking expert at Defaqto, said: “It can be really hard to save for a deposit for a home and high LTV mortgages are often the only way a first-time buyer can get on the ladder. The Stamp Duty Holiday may help first-time buyers but without the finance, home-ownership will be out of reach for most.
“It is encouraging to see lenders returning to the market and new products coming out for those with small deposits. We are seeing many come onto the market for only a few days and so borrowers will need to act quickly to secure these deals.”