Mortgages  

FTB mortgage rates hit lowest level in three years

FTB mortgage rates hit lowest level in three years

Newly published data has revealed that the number of first-time buyer products is on the up and mortgage rates are at their lowest levels in three years.

The number of overall mortgage products available to first-time buyers is currently 2,776. Thanks, in part, to the government’s Help to Buy scheme, this figure is double that in April 2012, when there were only 1,324 first time buyer products on the market.

In addition, the average rate for first-time buyer mortgages has dropped by one percentage point in the last three years to 3.26 per cent.

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With the average loan-to-value required for first-time buyers remaining flat over the last three years (79 per cent now, compared to 78 per cent in April 2012), those looking to get their first foot on the ladder would need to stump up £31,500 on a £150,000 property.

A 5 per cent deposit on the same property would cost £7,500. The number of 95 per cent LTV mortgages available has increased significantly over the last three years, with 170 mortgage deals currently on the market compared to only 31 products in 2012.

In addition, average rates on these higher LTV products have decreased by 1.04 percentage points to 4.72 per cent.

Kevin Mountford, head of banking at the price comparison website, noted that the introduction of Help to Buy Isas - which will see the government provide up to £3,000 towards a first-time buyer’s deposit - could also help prospective homeowners get into a new LTV bracket, thus helping them secure a more competitive deal.

“For anyone looking to buy their first home, it’s important not to be led by interest rates alone when comparing mortgages.

“Expensive fees can wipe out the potential benefit of a lower rate so it’s worth doing the sums first to ensure you really are getting a great deal.

“Whilst mortgage approvals were up 7 per cent overall on March, this doesn’t mean that lenders’ criteria is becoming more relaxed.

“After the introduction of the Mortgage Market Review, borrowers not only need to have a strong credit score, they also need to prove that they can afford the mortgage they’re applying for – not only at its current rate but, if rates should rise in the future”

peter.walker@ft.com