Although the mortgage market may be fairly more fraught than it was this time last year, there are still plenty of good deals available for first-time buyers looking to take the plunge and clamber onto the property ladder.
Over the last month mortgage rates here in the UK have been steadily decreasing. Whilst rates have, over the last week or so, begun to drop at a slightly slower rate, there remains plenty of solid deals cropping up from lenders who are keen to outdo the competition. Today, we thought we’d take some time to explain what the current climate is within the mortgage market, and point you towards some of the very best deals that are currently available to first-time buyers.
What does the mortgage market currently look like?
After mortgage rates shot up in 2022, they did begin a slow decline towards the tail-end of the year. This trend has thankfully continued on throughout the first months of 2023.
But why are rates so volatile, you may be wondering. The up-down-up-down pattern in the market is due to the fact that mortgage rates are intrinsically linked to the Bank of England base rate. Since the end of 2021, when the rate was at a historically nominal low of 0.1%, it has risen 11 times in succession, taking us up to a current figure of 4.25%.
The Bank of England raises the rate in order to try and suppress inflation, which is currently a huge issue in the country’s economic landscape.
Interestingly, despite the previous increase to the base rate in March, most lenders still have not inflated their rates. In fact, some lenders, such as Nationwide, actually chose to lower their interest rates following the most recent base rate increase, which is good news for prospective homeowners looking to secure their first mortgage.
What sort of rates are currently on offer?
We’ve gathered some of the most competitive rates on the market to share with you today for both two-year and five-year fixed mortgages, so you can create a clearer picture of what is on offer to you as a first-time buyer. As always, it’s essential to try and raise as hefty of a deposit as possible, in order to access the most competitive deals with the best value for money.
However, if you’re working with a small deposit (and let’s be honest, that’s often the case for the majority of first-time buyers) there are still plenty of good deals on the market, so don’t be deterred!
60% mortgages
Let’s start off by looking at what’s available for 60% mortgages, as the best rates are usually those made available for borrowers looking to secure a mortgage at a 60% loan-to-value.
Two-year fixed: As it currently stands, the best rate right now for a two-year fixed mortgage is available through Barclays Mortgage. At the moment they are offering a 4.34% initial rate with no upfront fee, or a 4.08% initial rate with a fee of £999.
Five-year fixed: For a five-year fixed mortgage, the best rate is being offered by Virgin Money at 3.79% with an upfront fee of £1,495. If you want to avoid an upfront fee, First Direct boasts the most competitive rate, offering 3.99% with no fee.
75% mortgages
If you can afford to put together a 25% deposit, you’ll also benefit from some of the best deals available on the market.
Two-year fixed: At the moment, the most competitive rate for a two-year fixed mortgage is being offered by Barclays Mortgage, again. Barclays are offering a 4.36% initial rate with no upfront fee, or a 4.13% initial rate with a fee of £999.
Five-year fixed: For a five-year fixed mortgage, the best rate is being offered by Yorkshire Building Society, standing at 3.92% with an upfront fee of £1,495. If you don’t want to pay an upfront fee, the best deal is from First Direct, who are offering an initial rate of 4.04% with no applicable fee.
85% mortgages
A 15% deposit certainly won’t grant you access to the best deals the market can offer, but it’s certainly not a bad position to be in.
Two-year fixed: When it comes to 85% mortgages, the best deal right now for a two-year fixed mortgage is through Leeds Building Society. This lender is currently offering an initial rate of 4.79% with no upfront fee, or 4.49% with a fee of £999.
Five-year fixed: For a five-year fixed mortgage, the best rate is being offered by Virgin Money, standing at 4.19% with an upfront fee of £1,495. To skip the upfront fees, check out Santander, who is offering 4.34% with no fee.
90% mortgages
We’re creeping towards the most expensive end of the scale here. However, don’t be discouraged! A 10% deposit will still secure you a significantly better rate than a 5% deposit.
Two-year fixed: We’ve identified the best deal on a two-year fixed mortgage to be through Virgin Money, who is offering an initial rate of 4.73% with an upfront fee of £1,495. If you can’t find the cash for an upfront fee, however, Leeds Building Society is offering an initial rate of 5.1% with no fee.
Five-year fixed: For a five-year fixed mortgage, the best rate is being offered by Virgin Money, with an initial rate of 4.37% on offer with an upfront fee of £1,495. The cheapest rate with no upfront fee is being offered by First Direct, standing at 4.54%.
95% mortgages
You may only be armed with a 5% deposit, but that is absolutely okay. You should be proud of yourself for being able to scrape together anything in this disastrous economic climate, where the odds often feel stacked against first-time buyers!
So, fear not, the important thing is that you’ve got what you need in order to be able to get on the property ladder, even if what you’ve managed to raise is, admittedly, the minimum. You’ll pay the highest mortgage rate, but you’ll have a home.
Two-year fixed: When it comes to 95% mortgages, the best deal right now for a two-year fixed mortgage is through Leeds Building Society. They are currently offering an initial rate of 5.55% with no upfront fee, or 5.29% with a fee of £999.
Five-year fixed: For a five-year fixed mortgage, the best rate is being offered by Leeds Building Society, with an initial rate of 4.84% on offer with an upfront fee of £999. The cheapest rate with no upfront fee is being offered by Cumberland Building Society, at 4.93%.
Looking to get on the property ladder but wondering where to start when it comes to accessing the best deals as first-time buyers? We can help. Simply contact us today.
