The number of first-time products that require either a 5 per cent or 25 per cent deposit has risen, but so has the average rate, according to AmTrust’s quarterly mortgage loan to value tracker review.
The number of products aimed at first-time buyers with a 5 per cent deposit and looking to buy a house at £167,196 (the average price for a first-time buyer as of April 2018 according to UK Finance) has risen from 66 to 97 two-year products as compared to the last quarter. Those with 25 per cent to put down and looking at the same price range and the same fixed term have 734 products to choose from, up from 402.
However, the bad news is that this increase in choice hasn’t led to cheaper rates, with the report stating that, “average interest rates have increased quite significantly for those with either a 5% or 25% deposit, with the former seeing average rates up by 21 basis points and the latter by 12 basis points.” The report suggests that this is down to lenders pricing in a possible August base rate rise.
AmTrust Mortgage & Credit business development director Pad Bamford says: “The ‘mood music’ around the Bank of England’s MPC suggests that a rate rise is increasingly likely in August and mortgage lenders appear to be jumping before they are pushed.
“In a way this might be viewed as something of a positive as it should not mean a big glut of lenders jumping to raise rates once the announcement is made. However, this is only because rates have been upped over the past few months and there is a strong message to the market here that the days of ultra-low pricing is likely to be behind us.”