Rates for prospective home owners have tumbled since last summer, despite the 0.25% increase to the Bank of England base rate in November, according to Moneyfacts.
The typical two-year fixed rate at 95% Loan To Value (LTV) today sits at 4.09% from 4.24% in July 2017.
Over the same time frame, the average five-year fix at 95% LTV has gone from 4.55% to 4.49%.
Lenders have started the year with a battle to be seen as the “go-to” lender for first-time buyers, according to Charlotte Nelson, from Monyefacts.
She said: “This is great news for first-time buyers, who often feel they bear the brunt of every negative change in the mortgage market. With the Bank of England increasing the base rate in November, many would have expected inflated rates, particularly for the higher LTVs.”
Nelson added: “The products on offer aren’t just standard products either, with an array of different incentive packages and fees allowing borrowers to tailor their mortgage to their own needs.
“Borrowers at 95% LTV could receive an average amount of £419 in cashback on a fixed rate deal, which is a welcome boost to those who are cash-strapped.”
However, 95% LTV rates are still markedly above that at 90% LTV, with two-year rates in the latter at an average 2.65%, Moneyfacts data showed.
It means that borrowers who are able to save the extra 5% could save an additional £153.22 a month, or £1,838.65 a year, according to Nelson’s calculations.