Mortgage News
First-time buyers unaided by low rates
Estate agency Spicerhaart has claimed low interest rates have failed to help the first-time buyer crisis, despite Bank of England figures showing fixed rates have fallen to their lowest level since 1995.
Figures showed the average rate of a two-year fixed rate mortgage for a borrower with a 25% deposit fell to 3.8% in June.
Spicerhaart said that lenders are under increasing pressure to cut rates as the Bank base rate continues to be held at 0.5%, pointing towards improved affordability for borrowers.
However, Alison Beech, business relationship director at Spicerhaart, said that, while low fixed rate deals may be a good thing for the housing industry as a whole, it did not benefit first-time buyers.
She said: “Fixed rate mortgages are an attractive option for borrowers who want to be certain of their payments or who fear interest rates may start to rise. Borrowers with little equity or small deposits are likely to be the ones who benefit the most from a low rate fixed term mortgage.
“But, with 25% of the properties’ value required to secure the loan, for many hoping to get a first foot on the ladder this will still be out of reach.
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“Only borrowers with significant deposits or those looking to remortgage will be in a position to take advantage of these historically low mortgage rates.”