More low-cost mortgages are now on offer to first-time buyers, with loans that require only a 5 percent deposit and reduced interest rates from many lenders.
Research by moneyfacts.co.uk shows that 60 lenders now offer 95 percent loan-to-value mortgages, an increase from 53 in 2018. A decade ago, only three lenders were happy to take a 5 percent deposit in the immediate aftermath of the financial crash and subsequent credit crunch.
Repayment rates are also more competitive, 3.28 percent on a two-year deal and 3.73 percent on a five-year fixed mortgage. According to moneyfacts.co.uk, these are record low rates for first-time buyers, with the vast majority of 95 percent LTV deals offered on a fixed rate.
Darren Cook, finance expert at moneyfacts.co.uk, said: “A decade ago, borrowers who could only raise a 5 percent deposit had just three products from three mortgage providers to choose from.
“Today a borrower can choose between 405 products available from a total of 60 providers.
“As more firms become willing to lend at this higher-risk tier, it means potential homeowners have a greater choice of products, incentives and service, which can only be good news for borrowers.
“There clearly seems to be a positive drive by mortgage providers to try and secure the business of potential first-time buyers, the lifeblood of the mortgage market, and it is encouraging to see rates decrease because of this healthy competition.”