95% mortgages on the rise

First-time buyers have more 95% loan-to-value products to choose from than last year despite the expiry of the Help to Buy mortgage guarantee scheme in January, Moneyfacts data shows.

There are currently 276 95% LTV deals on the market, up from 276 in February last year.

Rates have also cheapened to average at 3.98% for a 2-year fix, down from 4.26%, and 4.43% for a 5-year fix, down from 4.76%.

Rachel Springall, finance expert at Moneyfacts, said: “The first-time buyer mortgage market has gone from strength to strength over the years boosted by government support.

“In previous years, there had been a lack of competition for those considered more risky, due to the small amount they could put down as a deposit.

“Prospective buyers today have so many more cost-effective mortgage options available, potentially making their dream of owning their first home much more achievable.”

“Five years ago, long before the Help to Buy mortgage guarantee scheme launched, there were only 59 deals available to buyers with a 5% deposit, from just 24 lenders – 75% of which were mutuals.

“Today, the number of deals has rocketed to 276 with 53 different lenders, including most of the largest high street banks.”

She added: “It’s not just the available choice that will benefit first-time buyers, there’s also a huge reduction in the cost of a mortgage, with two and five-year fixed rates for those with a 5% deposit falling from 5.93% and 5.89% to 3.92% and 4.43% respectively over the last five years.

“Based on the average five-year fixed rate, that’s a difference of £7,715.40 in terms of repayments during the first five years of the mortgage.”

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