First-time buyers benefit from increased competition among lenders

According to news reports, first-time buyers are seeing revived support from mortgage lenders with rates and affordability at their lowest ever for this market.

Coupled with the stamp duty cut for properties up to £300,000 announced last November saving first-time buyers an average of £5,000 on their property purchases, 2018 seems to be a good year to get on the property ladder.

A Mortgage Solutions poll shows 80% of respondents agreeing that competition between lenders is creating better first-time buyer mortgages. This is certainly supported by Halifax’s launch of a £1,000 cashback deal for first-time buyers (and home movers) who use a broker to secure a fixed-rate deal and Accord’s unveiling of its new first-time buyer 95% loan-to-value mortgage range. All Accord first-time buyer products now come with £1,000 cashback on completion and include a fee-free two-year fix at 3.94% and a five-year fix at 4.40%.

Cashback and reduced fees help new borrowers

Jemma Anderson, mortgage manager at Accord, said: “Research we conducted last year highlighted the main barrier to owning a first home as the upfront costs involved. This dedicated first-time buyer range has been designed with this in mind offering £1,000 cashback, free valuations and fee-free options.

“We hope the combination of competitive rates and additional features will make the process of buying your own home a little easier.”

Marsden Building Society has also overhauled its first-time buyer mortgages by increasing the maximum loan size for 90% LTV to 95% from £300,000 to £325,000. Heather Crinion, general manager of operations at Marsden Building Society said: “We’re positioned to support first-time buyers … and our new product changes reflect this with a reduction in rates and changes to our criteria.”
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In February this year, more mortgages were lent to first-time buyers than to home movers. Of the 50,000 home purchase mortgages – the highest level for February since 2007 –  25,200 were first-time buyer mortgages, which is also a 2.4% increase on first-time buyer mortgages lent in February 2017.

According to UK Finance, last year saw the highest number of people – a total of 365,000 – buying their first home since the 2007/2008 financial crisis. If competition between lenders continues for first-time buyers, 2018 may well be a record year.

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