Competition Among Lenders Boosts Mortgage Deals for 1st-Time Buyers

Competition among mortgage lenders adds up to very good news for 1st-time buyers looking to secure mortgage deals on a new home.

As a result of the competition, lenders are cutting the repayment rates on the deals they have on offer for newbies to home ownership.

And, in effect, the bigger a deposit a first-time buyer can bring to the table, the better the mortgage deal they can secure.

Fixed-Rate Mortgage Deals Appealing

Comparison website moneyfactors.co.uk has revealed that the average rate of repayment interest on a two-year fixed-rate mortgage dropped from 3.27 percent in November to 3.25 percent in December.

That’s on a loan-to-value (LTV) of 95 percent. In this instance, the buyer must provide a deposit of at least 5 percent.

On five-year, fixed-rate LTV mortgage deals, for instance, repayment rates fell from 4.60 percent in November to 3.57 percent in December.

Driving Interest Rates Down

Darren Cook, finance expert at Moneyfacts, said:

“First-time buyers seem to have benefited the most during November.

“Providers appear to be once again competing for this business by driving interest rates down.”

Bigger Deposit Helps

Cook added:

“During the latest round of competitive cuts, it appears that mortgage providers are lowering rates for those with a smaller deposit.

“The average rates at 90 percent and 95 percent are seeing greater reductions than their lower LTV counterparts.

“It is always worthwhile for a potential first-time buyer to try to raise an additional deposit and attempt to step down the ladder to find a deal offering a more favourite interest rate.”

Best Fixed-Rate Deals

In the light of their research, Moneyfacts point to the best current mortgage deals on the market for first-time buyers.

For example, Newcastle Building Society has a 2.59 percent deal that’s fixed until February 2022.

For the best five-year fixed-rate deal, however, look to Nottingham Building Society’s 2.75 percent repayment that’s fixed until March 2025.

On balance, the more competition among lenders, the better the options for first-time buyers. Now seems like the ideal time to secure a deal for those ready to buy.

Kindly shared by Homeward Legal