Lending market tilting in favour of first-timers
IS THE big chill which has frozen first-time buyers out of the housing market finally beginning to thaw? The answer is a hopeful "yes", following the move by Nationwide, Britain's biggest building society, to cut its 90 per cent fixed rates.
The two-year fixed rates fall 0.7 per cent to start at 4.49 per cent; three-year fixed rates fell 0.6 per cent to start at 4.69 per cent; and five-year fixes fell by 0.5 per cent, with rates starting from 4.99 per cent.
However, leading brokers reckon that first-time buyers could get even better deals early in 2013.
Ray Boulger, senior technical manager at mortgage broker John Charcol, says: "We are certainly seeing more competition on rates at the high LTV end of the e market.
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"It may be that lenders who have been targeting cheapest rates at buyers able to accept LTV limits around 60 per cent are facing a saturated market at that level. So they may need to find another sector to keep business rolling in."
Andrew Hagger, an independent personal finance analyst at Moneycomms.co.uk, says: "The mortgage situation is now probably the best it has been for first-time buyers in three or four years.
"For most mortgage deals, buyers will still require a minimum 10 per cent deposit.
"If you have to go to 95 per cent, a deal from Newcastle Building Society – a five-year fix at 5.99 per cent plus £690 in fees – shows how steeply the price of money can rise for buyers who need that extra help."
Hagger thinks The Co-operative Bank rates are "still head and shoulders above the competition".
For borrowers with a 10 per cent deposit, The Co-operative Bank has a two-year fixed at 3.99 per cent, with no fee. For borrowers able to accept an 85 per cent LTV, the three-year fix costs 3.79 per cent, with £999 fee.
On two-year fixes for first-time buyers who need a 90 per cent LTV, Hagger reckons the next best buy is from Newcastle Building Society at 5.99 per cent, with no fee.
On three-year fixes, The Co-operative Bank's deal at 3.79 per cent compares well against Nottingham Building Society (4.79 per cent and no fee to 90 per cent LTV) and First Direct (4.89 per cent and no fee to 90 per cent LTV).
Another leading building society, the Chelsea, a subsidiary of Yorkshire Building Society, has a range of options to help first-time buyers, including a range of two-year fixes from 75 per cent to 90 per cent LTV, with rates from 2.99 to 4.24 per cent.
However, these mortgages stand apart from the pack because they include one per cent cash back.
Hagger says buyers should wait until the new year before they commit themselves. "Don't rush in," he says, "the market is quite competitive and this will carry on into the first quarter of 2013. Many lenders have yet to show any appetite for low-deposit lending."