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First-time buyer rates at three-year low

  • 02/06/2015
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First-time buyer rates at three-year low
Mortgage rates for first-time buyers are at a three-year low, market data has suggested.

Would-be homeowners are also benefiting from more products being available, research from Money Supermarket said.

In the past three years the average first-time buyer mortgage rate has fallen by one percentage point to 3.26%.

During the same period the number of first-time buyer mortgages has more than doubled. Money Supermarket said there were currently 2,776 products targeted at young buyers on the market.

It said this figure had been boosted by the launch of the government’s Help to Buy scheme. In April 2012, before the scheme’s launch, there were only 1,324 first-time buyer products on the market.

The number of mortgages available for people with a 5% deposit has also increased, growing from 31 to 448 in the last three years.

Kevin Mountford, head of banking at Money Supermarket, said first-time buyers should be mindful of the whole cost of a mortgage and not be lured by a headline rate.

“The increase in the number of first time buyer mortgages, and the corresponding fall in interest rates, can only mean good news for those looking to get a foot on the ladder. Even better, borrowers who can scrape together a 10% or even 15% deposit will find they are able to get their hands on more competitive deals,” he said.

“For anyone looking to buy their first home, it’s important not to be led by interest rates alone when comparing mortgages. Expensive fees can wipe out the potential benefit of a lower rate so it’s worth doing the sums first to ensure you really are getting a great deal. Whilst mortgage approvals were up 7% overall on March, this doesn’t mean that lenders’ criteria is becoming more relaxed.

“After the introduction of the Mortgage Market Review, borrowers not only need to have a strong credit score, they also need to prove that they can afford the mortgage they’re applying for – not only at its current rate but, if rates should rise in the future.”

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