Mortgages  

First-time buyer products hit highest level in 8 years

First-time buyer products hit highest level in 8 years

First-time buyer products have reached their highest level since 2007, with the number of 90 and 95 per cent loan-to-value mortgages now totalling 723 products, according to Moneyfacts.

In August 2007 there were were 1,815 products available at 95 and 90 per cent LTV. Following the recession, the number of 90 and 95 per cent LTV products have slowly been creeping up. Five years ago, there were just 194 products available, in 2013 there were 437, last year there were 600 and now there are 723.

Charlotte Nelson, press officer at Moneyfacts, said: “Surprisingly, Help-to-Buy doesn’t account for all of these new products, but with the number of deals totalling 437 before the scheme was launched, it is clear that Help to Buy acted as a catalyst for banks and building societies to get in on the act.”

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She added that with “fierce competition” in the market, the average rates for 95 per cent LTV deals have fallen to the lowest on record, with the average two-year fixed rate now standing at 4.47 per cent.

Data from the Bank of England, published last month, revealed mortgage interest rates on gross advances also hit their lowest level since 2007. The overall average interest rate on gross advances decreased by 25 basis points, from 3.26 per cent in the fourth quarter of 2014 to 3.01 per cent in the first quarter this year.

Ms Nelson said: “The boost in numbers and the lower rates suggest that lenders are finally recognising the importance of first-time buyers, who have often been considered the life-blood of the housing market.”

The latest provider to add to its high LTV range was TSB Intermediary, which on Friday (3 July) launched broker-only 95 per cent mortgages starting at 4.49 per cent and available to homebuyers looking to fix repayments for two, three or five years.

Ms Nelson commented that while it is great to see the availability of deals for small deposit holders increase, first-time buyers still lack the same choice as those with larger deposits, with banks continuing to favour less risky buyers.

“The improving higher-LTV market is also not an indication that riskier lending has returned, as the Mortgage Market Review is now firmly entrenched in bank policy, and only borrowers with a squeaky clean credit history and enough savings will be able to make the first step onto the housing ladder.”

peter.walker@ft.com