16 Dec, 2019/ by Homeward Legal /First Time Buyer
Competition among lenders adds up to good news for first-time buyers looking to secure mortgage deals.
As a result of the competition, lenders are cutting the repayment rates on the deals they have on offer for newbies to home ownership.
And, in effect, the bigger a deposit a first-time buyer can bring to the table, the better the mortgage deal they can secure.
Fixed-rate mortgage deals appealing
Comparison website moneyfactors.co.uk has revealed that the average rate of repayment interest on a two-year fixed-rate mortgage dropped from 3.27 percent in November to 3.25 percent in December.
That's on a loan-to-value (LTV) of 95 percent,. In this instance, the buyer must provide a deposit of at least 5 percent.
On five-year, fixed-rate LTV mortgage deals, for instance, repayment rates fell from 4.60 percent in November to 3.57 percent in December.
Driving interest rates down
Darren Cook, finance expert at Moneyfacts, said: "First-time buyers seem to have benefited the most during November.
"Providers appear to be once again competing for this business by driving interest rates down."
Bigger deposit helps
Cook added: "During the latest round of competitive cuts, it appears that mortgage providers are lowering rates for those with a smaller deposit.
"The average rates at 90 percent and 95 percent are seeing greater reductions than their lower LTV counterparts.
"It is always worthwhile for a potential first-time buyer to try to raise an additional deposit and attempt to step down the ladder to find a deal offering a more favourite interest rate."
Best fixed-rate deals
In the light of their research, Moneyfacts point to the best current mortgage deals on the market for first-time buyers.
For example, Newcastle Building Society has a 2.59 percent deal that's fixed until February 2022.
For the best five-year fixed-rate deal, however, look to Nottingham Building Society's 2.75 percent repayment that's fixed until March 2025.
On balance, the more competition among lenders, the better the options for first-time buyers. Now seems like the ideal time to secure a deal for those ready to buy.