Mortgage News
FTBs still struggle to find funds
First-time buyers continue to struggle to access the mortgage market, as risk remains the overriding factor in setting mortgage rates, despite a drop in the cost of funding.
The latest research from Moneyfacts revealed that borrowers who have saved a 10% deposit have seen only a 0.12% reduction in the average mortgage rate, although the cost of funding to lenders has fallen by 4.35%.
Michelle Slade, spokesperson at Moneyfacts, said that first-time buyers have been ignored as lenders cherry-pick borrowers.
She added: “The high margin over the cost of funding at present is excessive and unjustifiable.
First-time buyers were once the lifeblood of the property market, but now they are seen as too risky to lend to. A 25% deposit remains the level where most lenders are willing to do business.”
Darren Cohen, mortgage planner at LRG, said the market would not return to normal until lenders started to offer deals at higher LTVs.
He said: “Lenders should have started lending at higher LTVs once house prices started to stabilise, but this has not happened. Although some lenders like HSBC have low rate deals, their criteria are very tight. Deposit sizes are pricing people out of the market.”
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