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.