According to Moneyfacts, based on the average UK house price of £271,188, this would indicate savings of around £67,800. The firm said this suggested a notable group of first-time buyers were in a “favourable” financial position.
Based on activity on Moneyfactscompare.co.uk, 30% of first-time buyers are looking for 90% LTV mortgages and 12% are in need of options at 95% LTV. Moneyfacts said this suggested many first-time buyers were reliant on smaller deposits of 5-10%, equating to a deposit of around £13,560-21,120, based on the typical house price.
Moneyfacts noted that those with larger deposits would be better off, as borrowers with smaller deposits or less equity could be paying £174 more each month than their counterparts.
Further, its data showed that many homemovers preferred to have at least 25% in equity before moving, as 69% hit this threshold before moving. Some 16% of homemovers had 15% before buying their next home.
| Consumer demand for fixed rate mortgages by LTV | |||||
| Max LTV | First-time buyers | Second-time buyers | Remortgage | Moneyfacts Average Mortgage Rate (two-year fix) | Monthly mortgage repayment |
| 60% | 17% | 47% | 68% | 4.21% | £1,349 |
| 75% | 14% | 22% | 19% | 4.74% | £1,424 |
| 85% | 23% | 16% | 10% | 4.83% | £1,437 |
| 90% | 30% | 11% | 2% | 5.1% | £1,476 |
| 95% | 12% | 3% | 1% | 5.42% | £1,523 |
Adam French, head of consumer finance at Moneyfactscompare.co.uk, said: “The widespread of first-time buyer LTV demand reflects a housing market increasingly shaped by unequal starting points. While many first-time buyers are stretching themselves with 90-95% LTV mortgages due to deposit constraints, a notable minority are entering the market with substantial deposits, often helped by family support or inheritance.
Aldermore Insights with Jon Cooper: Edition 9 – Why lending strategy is becoming more central in buy to let
Sponsored by Aldermore
“The concern is that it is creating a two-tier market, where buyers with higher deposits can access cheaper rates and lower monthly repayments, while others pay a hefty premium. For second-time buyers and remortgage customers, the data shows equity remains king, with most waiting to build at least 25% equity. Although, wise buyers should note that materially cheaper average rates kick in at around 15% equity.”
