New Deals For First Time Buyers

by Mark Johnston

A charted surveyor firm suggested that despite a growing range of low deposit loans fewer first time buyers were able to get their feet on to the property ladder due to a tightening of mortgage lending conditions.

In September 2011 the number of first time buyers fell to its lowest level in a year as a result of lenders providing fewer loans for those with smaller deposits.

Some financial experts have suggested that first time buyers numbers had fallen to low levels due to many lenders moving away from high loan to value lending (LTV) and starting to concentrate on wealthier borrowers.

Although Richard Sexton, business development director of e.surv. Said “the bank of England has repeatedly warned many high street lenders already have a high percentage of high loan to value (LTV) lending on their books and provisions may not adequately cover lenders current level of tolerance for struggling borrowers”.

According to the council of mortgage lenders (CML) the number of first time buyers in the UK has been under 200,000. Though home ownership is still an aspiration for many people.

However recently the HSBC has committed to make a further £350 million available to borrowers with either a 15% deposit or 15% equity. A minimum of £250 million will be reserved strictly for first time buyers.

This help for first time buyers continues with the launch of high loan to value (LTV) rates.

The mortgages for those with a 10% deposit  include a 2 year fixed rate at 4.49%, a 5 year fixed at 4.89% and a lifetime tracker, which tracks at 4.09% above the bank of England’s base rate. A 15% deposit would allow borrowers access to rates of 4.29% for a 2 year fixed, 4.69% for a 5 year fixed and 3.49% rate for a lifetime tracker. All of these deals are fee free.

There are other deals for those with a 10% deposit such as Chelsea building society whose 2 year fixed rate is at 4.09% but it comes with a large fee of £1,495 and also the Yorkshire building society which offers a rate of 4.19% on a 2 year fixed deal, but again has a fee of £995.

Ray Boulger of broker John Charcol picked out the 5 year fixed rate deal from HSBC as the best option for first time buyers and said “the longer you look ahead at the prospects for interest rates, the harder things are to predict, which is why some borrowers may be happier to pay that little bit more for the certainty over 5 years”.

David Hollingworth of broker London and Country states “the situation for first time buyers wanting a mortgage is gradually improving”.

The abbey building society has also decided to help first time buyers particularly those wanting to save for a deposit, by launching an account called the ‘home saver’.

This account offers a variable interest rate of 5% on savings. Savers make an initial deposit of between £100 and £5,000 and then save between £100 and £300 a month to qualify for the preferential rate.

The 5% rate is a very good savings rate these days however it does have a snag which is eligibility. To qualify savers must be under 35 and a first time buyer.

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