Good News For First-Time Buyers

More 90% Loan to Value Mortgages available for First-Time Buyers

New figures show, that mortgage products allowing applicants to put down 10% deposits have become increasingly common in recent weeks, which is very good news for First-Time Buyers who are finding that many more lenders are now competing for their business.

Moneyfacts, the independent market monitor has stated that the number of mortgages overall, available at 90% Loan to Value (LTV), has risen by 29 during the first two weeks of February 2021 alone. This is following an additional 88 products that came onto the market in January 2021. Currently, the total of deals on the market is 277, which is up from a month ago when there were 160, according to Moneyfacts and also a big improvement on the low of just 44 deals that were being offered in early September, due to the worries and complexities caused by the Covid-19 pandemic .

The increase could offer good news for the market as it is likely to trigger an increase in the demand for property, although the cost of mortgages remains an issue for some.

The average 2 year fixed rate of 3.56% is almost 1% above the same rate a year earlier, and while the 5 year fixed rate equivalent at 3.68% has dropped by 0.04% since the start of the month, it is also 0.77% above the February 2020 rate.

First-Time Buyers with a 10% deposit will also find more cash-back offers on the market today, rising from 50 to 83 over the past month, available from 17 lenders compared to just 12 in January.

Up until the Covid-19 pandemic, the number of First-Time Buyers had been on the increase in recent years, with more people climbing onto the property ladder than at any time since the financial crisis.

However, the number of First-Time Buyers fell by 46,000 or 13% year-on-year, coming in at 304,657. But, this can largely be attributed to the property market being shut down during the first lockdown in Spring 2020.

Although the effects of the Covid-19 pandemic slowed down activity last Spring, transactions by First-Time Buyers bounced back strongly in the second half of the year - as they did across the property market as a whole.

The average age of a First-Time Buyer has remained approximately the same for the last decade, increasing from 30 in 2010 to 31 today.

Eleanor Williams, spokesperson for Moneyfacts, says: “As the stamp duty holiday deadline approaches, RICS latest research indicates that January has seen the first fall in residential activity in seven months.

“First time buyers who found themselves unable to proceed last year, and who may not be impacted by the end of the stamp duty holiday if they are purchasing below a property value of £300,000, could buck this trend, as there may be good news for those ready to take their first step on the property ladder.

“While average rates – historically often higher than those available in lower LTV brackets due to risk – are above where they were a year ago, those for whom the longer-term stability of a five-year fixed may suit their circumstances may be pleased to note this rate has reduced 0.04 per cent since the start of this month alone.

“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.”