Top mortgage deals for first-time buyers
Things are looking up for first-time buyers. Some 90% and 95% mortgages are making a return to the market, and rates are beginning to look more competitive.
"It has been a gradual drip, not a sudden flood of higher loan-to-value (LTV) mortgages," says David Hollingworth, mortgage expert at broker firm London & Country.
Many of the big banks offer 95% LTV mortgages, but only to existing mortgage holders - effectively restricting first-time buyers' options.
Skipton Building Society offers a mortgage for first-time buyers of up to 95% LTV with a fixed rate of 6.99%, and has done so since late spring.
Last week, HSBC launched two new 90% LTV deals - a two-year fixed rate at 5.09%, and a lifetime tracker at 2.19% - both market-leading rates.
Hollingworth added: "HSBC has been lending at 90% for a while, but now with improved rates for first-time buyers."
While the mortgage industry might still be in the doldrums , interest rates at 85% and 90% LTV seem also to be improving.
Aside from HSBC, Britannia Building Society offers a less competitive 90% LTV five-year fixed rate at 5.89%. The Post Office also offers a 90% mortgage for first-time buyers with a five-year fixed-rate deal of 5.99%.
There has also been a rise in the amount of 'guarantor' deals where the minimum deposit amount is 5%, but an additional security guarantee is required - most likely from parents.
Lloyds TSB offers its Lend a Hand mortgage, which needs a 5% cash deposit as well as an extra 20% of the property value in a security savings account.
"It follows the same idea as the National Counties Building Society, which launched a Family First Guarantor deal at the start of the month.
"It will lend up to 95% on a child's property, but it requires additional security from the parents," said Hollingworth.
"It'll still be some time before we see lots of 95% mortgages on the market, but hopefully there will be some improvements in the rates at 85% and 90% LTV.
It's encouraging to see improvements in the market. The trend of higher LTV lending will continue into next year," he concludes.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.