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 the number of products available in April 2012 when there were only 1,324 first time buyer products on the market. In addition, the average rate on first time buyer mortgages has dropped by one percentage point in the last three years to 3.26%.
With the average loan to value required for first time buyers remaining flat over the last three years (79% compared to 78% in April 2012), those looking to get their first foot on the ladder would need to find a deposit of £31,500 on a £150,000 property. However, the number of 95% LTV mortgages available has increased significantly over the last three years, with 170 mortgage deals currently on the market available to those with a 5% deposit, an increase of 448% since 2012 when only 31 products were available. In addition, average rates have decreased by 1.04 percentage points to 4.72% on average.
Kevin Mountford, head of banking at MoneySuperMarket, commented:
“The increase in the number of first time buyer mortgages, and the corresponding fall in interest rates, can only mean good news for those looking to get a foot on the ladder. Even better, borrowers who can scrape together a 10 or even 15% deposit will find they are able to get their hands on more competitive deals. The introduction of the Government’s Help to Buy ISA which will see the Government provide up to £3,000 towards a first time buyer’s deposit, could also help prospective homeowners get themselves into a new LTV bracket, thus helping them secure a more competitive deal.
“Whilst mortgage approvals were up 7% 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.”
