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First-time buyer rates start to fall, despite interest rate hike

Written by: Christina Hoghton
Most mortgage rates inched up after November's Base Rate hike, but first-time buyer deals bucked the trend.

First-time buyer rates are falling, despite the recent hike in the Bank of England Base Rate, according to data site Moneyfacts.

While the rate rise caused the majority of rates in the mortgage market to edge up, research from the financial information provider highlighted that some higher loan-to-value (LTV) mortgage rates – for borrowers with a small deposit – have actually fallen since the increase.

The average two-year fixed rate mortgage for those with just a 5% deposit – often first-time buyers – was 4.21% in October 2017, before the November rate rise. It’s now fallen to 4.09%.

The five-year fixed rate for borrowers with just 5% upfront has dropped marginally over the same time period, from 4.5% to 4.49%.

Charlotte Nelson, finance expert at, said: “This is great news for first-time buyers, who often feel they bear the brunt of every negative change in the mortgage market. With the Bank of England increasing the base rate in November, many would have expected inflated rates, particularly for the higher LTVs. In fact, the average two-year fixed 95% LTV mortgage rate has fallen by 0.12% in just three months.

“While rates falling can only be considered a good thing, borrowers will find that high-LTV rates are still significantly higher than the rest of the market. For example, the average two-year fixed rate at 90% stands at 2.65% today – meaning borrowers who are able to save the extra 5% could save a whopping £153.22 a month, or £1,838.65 a year.”

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