According to research from Moneyfacts, average two- and five-year fixed rates at 90% and 95% LTV offered by building societies tend to be lower than the wider market.
Two-year fixed rates at 90% and 95% LTV are priced at 5.2% and 5.41%, which is lower than the wider market averages of 5.5% at 90% LTV and 5.61% at 95% LTV.
On the five-year fixed rate side, building societies charge on average 5.01% and 5.29% at 90% and 95% LTV respectively. This compares to 5.33% at 90% LTV and 5.53% at 95% LTV in the wider market.
However, building societies are more expensive than the top seven lenders, which are Barclays, Halifax, HSBC, Lloyds Bank, NatWest, RBS and Santander. Moneyfacts said, however, that the lowest rate deals might not be the best on a true cost basis.
On a two-year fixed rate basis, high street lenders’ average rate at 90% LTV is 4.7%. At 95% LTV, the average rate is 5.06%.
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For a five-year fixed rate, high street lenders on average charge around 4.61% at 90% LTV and 4.98% at 95% LTV.
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Moneyfacts’ mortgage market analysis of deals available to first-time buyers |
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Average fixed rates and product counts |
All lenders |
Building societies |
Barclays, Halifax, HSBC, Lloyds Bank, NatWest, RBS and Santander |
|
Average two-year fixed rate at 90% LTV |
5.5% |
5.2% |
4.7% |
|
Average two-year fixed rate at 95% LTV |
5.61% |
5.41% |
5.06% |
|
Average five-year fixed rate at 90% LTV |
5.33% |
5.01% |
4.61% |
|
Average five-year fixed rate at 95% LTV |
5.53% |
5.29% |
4.98% |
|
Two-year fixed deals at 90% LTV |
206 |
61 |
31 |
|
Two-year fixed deals at 95% LTV |
122 |
48 |
16 |
|
Five-year fixed deals at 90% LTV |
234 |
64 |
30 |
|
Five-year fixed deals at 95% LTV |
148 |
57 |
17 |
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Data correct as at 30/5/25. Deals shown are available to first-time buyers, but not exclusive to them; deals exclude adverse credit options. NatWest includes deals through its intermediary arm. Source: Moneyfactscompare.co.uk |
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Building societies are ‘working hard’
Building societies also offer more higher-LTV products compared to high street lenders. For instance, for two-year fixed rates at 90% LTV, there are 61 deals from building societies, which is nearly double the figure for the top seven high street lenders.
At 95% LTV, building societies make up around 48 of the two-year fixed rate deals, compared to 16 from the top seven high street lenders.
On the five-year fixed rate side, building societies offer 64 products at 90% LTV and 57 deals at 95% LTV. This is higher than the 30 and 17 deals offered by the top seven high street lenders respectively.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Mortgage affordability remains a key issue among first-time buyers, who may be struggling to see how they can make their homeownership dreams a reality.
“The government needs to propel its homebuilding plans, or we could be set for a rise in house prices. The good news is that mortgage rates have been coming down and this can give buyers more of a chance to secure a deal.”
She noted that building societies are “working hard to support new buyers”, pointing to lower pricing for two- and five-year fixed rate high-LTV deals compared to the wider market.
However, Springall said the biggest banks traditionally have more margin to price their mortgages lower, which is why they are “undercutting the mutuals”.
“Despite this, mutuals can tailor their ranges to provide best choice for those with small deposits when all the costs and incentives associated with the mortgage are included. Mutuals can also be more driven to create innovating products, such as the Track Record mortgage from Skipton Building Society,” she noted.
Springall said it has been over a decade since current loan-to-income (LTI) rules came into play and many mutuals have been calling for these to be “relaxed to give them more scope to lend more to first-time buyers”.
“At present, banks and building societies can do no more than 15% of their total qualifying loans. However, lenders have been given a nod to review their stress testing rules, with some of the biggest brands making changes over the past few months. This is a positive step if taken with care, to ensure borrowers are being supported, but most importantly feel protected.
“This month, the Financial Conduct Authority (FCA) is expected to open a public discussion on the future of the mortgage market, so it will be interesting to see what transpires. Those borrowers who have exhausted their savings will need to consider ways of securing a mortgage, such as lengthening the term of their deal.
“According to UK Finance, the average first-time buyer mortgage term is now 31 years as of March, compared with 28 years a decade ago. The right choice of deal and term will come down to the individual, so it is imperative borrowers seek independent advice before they commit,” she explained.
