The availability of first time buyer mortgages is showing a positive trend, with a 20% increase in mortgage deals available since the end of 2009.
Lender’s demands for larger mortgage deposits of 25%, long regarded as the killer for cash-strapped first time buyers, is relaxing, according to new figures*.
In October 2009, 66% of first time buyer mortgage deals required a deposit of 25% of house value. This has now fallen to 58%, and deals based on a 10% deposit, which were thought to be totally extinct, have been sighted in remote areas.
The number of first time buyer mortgage deals has also increased, reaching current levels of 1,700. This is the highest level in two years, and may indicate a warming-up of competition in the first time buyer mortgage marketplace.
As for existing mortgage holders, a slow increase in standard variable rates is expected to stimulate homeowners to ‘shop around’. Lenders are now jostling for position and offering better mortgage deals, in anticipation of increased interest from those homeowners, and in particular those with significant equity built up in their homes.
Possible stamp duty break for first-time buyers
The Shadow Chancellor George Osborne revealed on 2nd February that a conservative government would seek to stimulate the market for first time buyer mortgages by increasing the stamp duty exemption to £250,000.
If this turned out to be more than an election-year promise, it would be a significant additional boost for first time buyers. It would abolish the current levy of 1% on homes in the price bracket £125,000 – £250,000, in other words, no home worth less than £250,000 would be subject to stamp duty.
*Source: research by financial information service Moneyfacts
