Number of low deposit mortgage reaches 17-year high
The number of mortgages available to those with smaller deposits is at its highest level since 2008, giving first-time buyers a much wider choice of borrowing options.
There are currently 442 mortgages available to buyers with only a 5% deposit to put down, according to Moneyfactscompare.co.uk, up from 395 in March, whilst the number of mortgages for those with a 10% deposit has increased from 772 to 845 over the month. The last time there were more mortgages for those with a 5% or 10% deposit to put down was in March 2008, when there were 575 and 957 deals available respectively.
Rachel Springall, finance expert at Moneyfactscompare.co.uk said: “The Government has been clear that it wants lenders to do more to boost UK growth, and so a rise in product availability for aspiring homeowners is a healthy step in the right direction.
“But there is still room for improvement considering the number of 95% LTV mortgages accounts for just over 6% of the total amount of fixed and variable deals available to borrowers.”
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It’s not just first-time buyers who are benefiting from more mortgage options. Overall, there were 6,870 mortgages available at the beginning of April, compared to 6,684 at the beginning of March. Recent days have seen several lenders introduce fixed mortgage rates below 4%, with the best deals reserved for those with substantial deposits or a significant amount of equity if remortgaging.
For example, if you’re looking to remortgage, Nationwide Building Society has introduced a five-year fixed rate at 3.99%, although you must borrow at least £300,000, and the maximum you can borrow is 60% of the property value. This deal comes with a £1,499 arrangement fee.
Similarly, First Direct is offering a five-year deal charging 3.99% for those who are remortgaging, again with a maximum 60% loan-to-value. This deal has a £490 arrangement fee and includes a free valuation as well as free legal fees.
If you don’t want to lock in for five years, Coventry Building Society is offering a two-year fixed rate at 3.89% fixed until 31 October 2027 for home movers looking to borrow up to 65% of the property value. This mortgage has a £999 arrangement fee and includes a free valuation.
Barclays is offering two and five-year fixed rates for home movers at 3.99%, with a 60% loan-to-value (LTV) and a product fee of £899.
Sarah Coles, head of personal finance at Hargreaves Lansdown said: “The Trump tariff turmoil has already started feeding through into lower rates, as the mortgage market tends to move faster than savings. Moneyfacts figures show the average two-year deal is now 5.27% - compared to a month ago when it was 5.33% and a month earlier when it was 5.42%. There are super-competitive deals around below 4% now, which is a world away from the rates we’ve seen in recent years.”
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