"It is they who are suffering the most as rates rise by more, monthly/annual mortgage payments increase whilst at the same time product availability continues to drop."
Those who are only able to put down a 5% deposit continue to have "far less product choice and pay increasingly more for their loans" than those who are able to put down 25%, according to AmTrust.
Its research shows that lenders have already started to increase mortgage product rates with 95% LTV loan borrowers continuing to face faster-paced increases than those who can secure 75% LTV loans.
First-time buyers can now typically expect to pay over 70% more than those who are able to put down 25% of their property’s value.
Homeowners with a 5% deposit pay an average of £823 in monthly repayments, £341 more than the £482 paid each month by those with 75% LTV mortgages. In the last quarterly AmTrust LTV Tracker the difference was £324 per month.
According to the Bank of England, average interest rates for 75% LTV mortgages have risen since the start of 2017, now standing at 1.49%, up 0.12% from 1.37% in March this year. However, this is still down considerably on the rate of 1.91% in March 2016.
95% LTV average mortgage rates have also risen but by a greater pace than those for 75% LTV products. They now stand at 4.19%, up 0.19% since March this year.
The research also revealed that, for those wanting to purchase a property at both the average first-time buyer price in the UK (£160,967) and the average UK house price (£218,390), with only a 5% deposit/equity, there continues to be only one two-year product available, and just five products in total (across all terms and all deals).
The all terms/all deal product numbers have actually dropped by 1 product since the last iteration of the LTV Tracker, down from six to five.
Product availability has also dropped for those seeking to purchase at a house price of £250,000 with a 5% (£12,500) deposit. In the Q1 survey there were 62 two-year products of all types – this has now dropped to 59; while there are now 150 products of all types/all terms, this has dropped from 155 products.
Pad Bamford, Business Development Director at AmTrust Mortgage & Credit, commented: “It’s clear that while there is some softening of the mortgage market across the board – in terms of average rates and product availability – the impact on those with low levels of deposit is far greater than for those who can muster 25% or more. Given that first-time buyers tend to be in the former bracket, it is they who are suffering the most as rates rise by more, monthly/annual mortgage payments increase whilst at the same time product availability continues to drop.
“When the Help to Buy 2 Scheme was terminated, the Government suggested it was because levels of 95% LTV mortgages had returned to normal, however as our LTV Tracker clearly shows, when it comes to being able to purchase average-priced homes the number of 95% LTV products is actually falling. First-time buyers might be lulled into a false sense of security if they read that there are hundreds of 95% LTV loans available for their needs – the true number is likely to be much less."