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New mortgage deals for first time buyers


Stamp duty changes detailed in the Chancellor’s recent budget speech have led to a surge in interest from first time buyers – and lenders may be quick to see the opportunity.

With banks experiencing slow sales and a renewed interest from first time buyers, brokers have suggested that this area of the market may be an attractive proposition for lenders – despite the risk associated with high loan-to-value lending.

Barclays has already reintroduced 95% loan-to-value (LTV) mortgages this week, having withdrawn them from its range earlier this year. These deals are aimed at first-time buyers but can be used by any borrowers looking for a mortgage. They include a fixed 5-year deal at 4.74% (no fees), a fixed 5 year deal at 4.54% (£499 fee) or a fixed  2-year deal at 3.64% (no fees). Each deal is available on properties up to £500,000 in value which fits into the Government’s new deal to exempt homes of this value from stamp duty on the first £300,000 of the purchase price where the purchaser is a first time buyer.

Those with a 10% deposit can secure a lower rate of 2.79% for a five year fix – a reduction from 2.89% last week.

Barclays has been quick to act with deals appealing to first time buyers – but brokers are expecting other lenders to follow suit.

However, some housing experts are worried that the stamp duty break will not help buyers who are already struggling to scrape together a deposit. With the average house price at £243,945 in England, a mere 5% deposit would still require £12,197 of savings. In the Capital, the average is a far higher £483,568 requiring buyers to find a hefty £24,178 deposit if they are to meet the usual 5% minimum.

Brokers have commented that lenders are likely to release more deals to meet the growth in demand that has arisen from the stamp duty changes but they note that such deals are only accessible to those who can meet the challenge of finding the initial deposit.

The previous stamp duty break for first time buyers which was run between 2010 and 2012 had little impact on the number of first time buyer loans taken, according to UK Finance data. Similarly, HMRC’s evaluation of the scheme suggested it had no significant impact in terms of the affordability of residential property and that the majority of buyers using the scheme would have purchased property even if the deal was not available.

Thinking of purchasing your first property? Looking to remortgage your current home? Get in touch with our property team…

Southport 01704 532890

Liverpool 0151 928 6544

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