Financial education

Why the huge increase in mortgage deals is great for first-time buyers

September 2, 2021
Information published was correct at the time of writing


June saw a wave of new mortgage products added to the UK market. With 300 new products introduced, this means that there are now 4,243 mortgage deals available – in contrast with June last year when there were just 31.

In the first months of the pandemic in spring 2020, 95 percent LTV (loan to value) mortgages were withdrawn by providers nervous about a possible recession. By this June, 192 new products from this category had been put on the market – an increase of 80 on the month before.

The UK mortgage market has rebounded from the lows of 2020 thanks to the extension of the Stamp Duty holiday and increased confidence in the post-pandemic economy.

Low interest rates have also helped. According to the Financial Times, “Mortgage borrowers are paying out less in interest than at any time in the past 20 years, even as UK house prices have soared and the total stock of home loans has continued to rise. UK borrowers spent £31.6bn on mortgage interest in the 12 months to April, the lowest annualised monthly figure since the turn of the millennium, and less than half that paid in the year to October 2008, when the interest bill was at its peak.”

The best new mortgage deals can be found in the lower end of the LTV range with providers competing against each other to attract homeowners with high equity or buyers with large deposits.

For first-time buyers, rates on 90 and 95 percent mortgages are slightly higher than in 2019.Though according to the Bank Of England, it’s the first time since September 2020 that two-year fixed rate terms have gone below four percent for 95 percent LTV mortgages. Five-year rates with the same LTV are at an average of 4.07%.

With so many high-LTV products available, and with average rates beginning to fall this is certainly a good time to be a First Time Buyer.

A spokesperson for Charles Cameron said: “We’re pleased we can once again help all our clients, both first-time buyers and existing homeowners. Though while the market is buoyant, we’ll always go past the headline enticements – like super-low deals – to secure a deal that works over time.”

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