Rise in choice of first-time buyer mortgages
The number of products available at 90% of the property’s value has risen by 29 in the first two weeks of February alone, according to Moneyfacts.
This follows 88 additional products coming onto the market between the start of January and February, to stand at 277.
It’s good news for first-time buyers who are more likely to need to borrow 90% of the property’s value and have felt locked out of the mortgage market over the last year. In September 2020 there were only 44 deals.
But Moneyfacts noted that there are still far fewer than the 776 deals available at the start of February 2020.
However, mortgage rates have risen for those borrowers with just 10% upfront.
The average two-year fixed rate of 3.56% is almost 1% above the same rate a year earlier, and the five-year fixed rate equivalent at 3.68% is 0.77% above the February 2020 rate.
First-time buyers with a 10% deposit will find more cashback offers on the market today, rising from 50 to 83 over the past month, available from 17 lenders compared to 12 in January.
Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “Options for those with a 10% deposit have improved greatly over recent months, with 15 more providers offering 90% LTV products since the start of this year, and the number of products themselves increasing by 117 since the beginning of January.
“This means that there is far greater choice for would-be buyers in this area of the market.
“There are of course still hurdles for these borrowers to overcome; house prices inflated quite significantly last year – although early indications are this may be slowing in 2021 – and savings rates have continued to descend to rock bottom lows, making building a larger deposit difficult, as have high rental payments.
“But their options have been steadily increasing and there is hope that 2021 may see more potential home-buyers take that first step onto the property ladder.”