Increasing confidence in the property market has led to a further boost for first time buyers, with 95% mortgages making something of a comeback.  It’s not all good news though, especially for buyers who can only afford a small deposit, reports the BBC.

Since the 2008 financial crash, the number of 95% loan-to-value mortgages offered has fallen dramatically- over 411 such deals were available on the market ten years ago. This is because lenders were forced to turn to property buyers who could afford to put down a much bigger deposit, and therefore represented less of a risk. Regulators also forced lenders to carry out much stricter affordability checks on potential mortgage customers and hence first time buyers were hit harder than most.

Good and bad news for first time buyers

Of course, since then the market has slowly recovered and the Government has provided some assistance to first time buyers with a number of schemes such as Help to Buy. Revisions to Stamp Duty rules have also helped.

Financial information service MoneyFacts has now disclosed that the number of 95% mortgage deals available has risen over the 300 mark for the first time since April 2008. 307 such deals are now available – a rise from 253 in 2017. This level of competition is very healthy for the market and in particular for those looking to purchase homes.

This is undoubtedly a boost for young couples and young professionals seeking a route on to the property ladder. MoneyFacts have still sounded a note of caution, stating that first time buyers may be wise to act sooner rather than later, as indications show that interest rates on 95% deals are likely to rise.

Research shows that the average interest rate for a fixed two-year deal on a 95% mortgage is 4.02%, which has fallen for the fifth consecutive month. But it appears to be a case of “when, not if” in terms of rates on 95% loan-to-value products rising.

How our residential property department can help you

Once your mortgage application has been approved in principle, you’ll be eager to book viewings and have an offer accepted. You’ll therefore need solicitors you can trust, who understand the anxieties fundamental to new buyers, and who will do their utmost to progress your case as quickly as possible.

Call our friendly residential property experts today on 0113 284 5000 and let us help you get that important first step on the property ladder.

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