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First-time buyer choice suffers after drop off in high LTV mortgages – Moneyfacts

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  • 23/08/2016
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First-time buyer choice suffers after drop off in high LTV mortgages – Moneyfacts
The number of deals available up to 95% of a property's value has dropped by 16% in the last five months, according to Moneyfacts.

In March there were 270 low-deposit deals available, but only 225 are available today, data revealed.

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said the findings were “particularly bruising” with some first-time buyers expecting cheaper house prices to help them onto the property ladder more easily.

“Unfortunately, a downturn in property prices can have a significant impact on the higher LTV mortgage sector,” she said.

A negative turn in prices effectively depreciates the provider’s resale value of the bricks and mortar, which results in providers reeling in their criteria and paring back their offerings to this section of the market. With many uncertainties in the market, providers might be treading carefully and being more cautious about what they choose to offer the higher risk borrower, such as high cash incentives and multiple product options.”

But Moneyfacts pointed out that it was not all bad news for first-time buyers. Mortgage rates at 95% LTV have fallen to all-time lows. For example, the average two-year fixed rate at 95% LTV has fallen from 4.44% to 4.04% today.

And there are still more first-time buyer friendly deals on offer than a year ago, when only 195 of these products existed. Just this week, Halifax Intermediaries began offering £1,000 cashback to first-time buyers, home movers, buy-to-let customers and mortgage ‘switchers’.

Nelson added: “Whilst it may feel that the odds are stacked against the first-time buyer, the 95% LTV market has seen a marked improvement from even a few years ago. So borrowers should take advantage of the deals available now, to avoid perhaps being disappointed in the future.”

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