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First-time Buyer

First time buyer mortgage deals are back…but with a catch

Paloma Kubiak
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Paloma Kubiak

More lenders are offering low deposit, 90% loan to value (LTV) mortgages, however, many of these deals are restricted to select applicants, analysis has found.

Out of 86 mortgages available to first time buyers at this level, only 25 are offered to everyone, according to financial information experts Defaqto.

More than a quarter are not available in Wales and 18 are only available through certain broker networks, with postcodes restricting a further 22 of the mortgages.

It means many borrowers still can’t access deals, even though there are more of them.

At the same time, these products are more expensive today than they were a year ago.

The average 90% LTV mortgage costs 12% more than it did a year ago.

The lowest rate two and five-year fixes available to most borrowers are both from Nationwide at 3.49% and 3.54% respectively, according to Defaqto.

Another option for those who have family able to help is to consider an intergenerational mortgage or family assist product.

Again, there is not as much choice as there was last year, with eight products today compared with 24 a year ago.

However, the interest rates on these products are competitive, with Barclays’ Springboard five-year 95% LTV at a lower than the standard 90% LTV fixed rate products at 3.05% compared to a 3.54% equivalent with Nationwide.

Katie Brain, banking expert at Defaqto, said: “This year we have seen many 90% LTV products launched into the market, only for them to be pulled just days later. It looks like the market is stabilising now and borrowers have more certainty about getting one of these mortgages.

“The bad news for first time buyers is that many of these products have restrictions which prevent the majority of people from accessing them, so they still have little choice.”