The governments funding for lending scheme seems to be having an effect as lenders rush to offer the lowest mortgage rates and a price war gets underway – but only if you have a big deposit.
For instance NatWest are to reduce their core market intermediary rates with the launch of a 5 year fix of 2.99% on November 1st for those with a 40% deposit. However, these lower rates and great deals seem to be restricted to those customers with a deposit of at least 25%. At the same time, NatWest are not offering any core mortgages at all through the intermediary channel for those customers with a deposit less than 25% unless they are already a NatWest customer.
Recent market movements have seen lenders offer rates under 2% - for example, Tesco Mortgages have launched their 1.99% 2 year fixed mortgage with a 40% deposit.
Given rents have increased in recent years, many first time buyers seem to be finding it difficult to save a deposit of 5% or 10%. Even if they do manage to save a small deposit the options open to them are limited with far fewer 90% and 95% mortgages available now than at the peak of the market.
However, all is not lost, as some of the smaller Building Societies do have some good rates with low deposits and, with the help of a good broker, first time buyers can search them out and more importantly qualify for the best deals.
So while at the moment it does not look as though Funding for Lending is helping the majority of first time buyers, the hope is that the good rates begin to trickle down to help those with smaller deposits – eventually.
