First-time buyers £800 better off than last year

First-time buyers who buy this year compared to last year are making an annual mortgage saving of around £800 because of falling mortgage rates, Genworth’s Moneyfacts LTV tracker has found.

Based on typical FTB house prices (£154,599) FTBs are saving £804 over the course of a year with a 10% deposit and £792 with a 5% deposit when buying in March 2016 compared to March 2015.

Of course in many areas of the UK the saving is offset by rising house prices.

Simon Crone, Genworth vice president – mortgage insurance Europe, said: “Competitive rates available for those with just 5% or 10% deposits mean they are able to make huge savings compared to what they would have paid for the same loan in previous years.

“This is important for a group who face numerous challenges to enter the property market, typically facing far higher costs than those with the parental support to gather together a larger deposit.”

But this period of low mortgage rates may come to an end when the Basel capital requirements kick in and the Help to Buy Mortgage Guarantee scheme expires at the end of the year.

Crone added: “When HTB2 finishes at the end of the year, appetite for lending to those with small deposits will decline further and many more hopeful first time buyers will be priced out unless they can secure help with a deposit.

“First time buyers are crucial to the health of the wider housing market and failure to adequately support them will have a knock-on effect to other homeowners.

“While the government has put in place a series of short-term fixes, a permanent solution is the only way to resolve the housing crisis.

“Government intervention through Help to Buy has shown mortgage insurance is effective at encouraging high LTV lending without inflating risk or reducing standards.

“The private sector can now offer a longer term solution that removes risk from the taxpayer while boosting homeownership to a wider group.”