The Department for Communities and Government’s latest figures show the average first-time buyer property cost just over £153,000. Based on the current average deposit first time buyers are saving towards, this allows them access to a maximum of an 85% LTV mortgage. Best buy tables show the most competitive 85% LTV they can access is 3.34% for a two-year fixed rate (repayment mortgage), which would mean a monthly repayment of around £640.
If first-time buyers were to increase the amount they are saving towards by £15,500 this would give them access to a far wider range of mortgages, including 75% LTV deals. Current best buy tables show two-year fixed rates available on 75% LTV deals from 2.89%. On a capital repayment mortgage this would mean a monthly bill of £536 and an overall monthly saving of at least £100; that’s £1200 a year.
The data also showed that of those looking to buy, one in 15 (6%) admitted that they had already been turned down by a mortgage lender.
More and more first-time buyers are now looking for professional advice to get them onto the ladder; unbiased.co.uk’s "find a mortgage adviser" search shows enquiries for first-time buyer advice from a whole of market mortgage adviser have reached record levels, accounting for on average nearly one in four (38%) mortgage searches over the past year alone.
Karen Barrett, Chief Executive of unbiased.co.uk, said: "Our latest research highlights the gap between the amount first-time buyers are able to save up and what is needed to access the most competitive rates in the market. While saving towards that initial deposit is no easy feat in the current economic climate, the figures show that if first-time buyers’ aim towards a larger deposit they could save significantly on their yearly repayments. Long gone are the days of 100% LTV mortgages and £10,000 deposits. Stricter lending criteria have also meant that many first-time buyers aren’t even making it past the application stage."
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