First time buyers hit by extortionate rates

A recent report has shown that many fist time buyers are continuing to have problems when it comes to securing a mortgage, with many being hit by extortionate interest rates on mortgage loans.

With lenders increasingly wary over lending to higher risk customers, and with first time buyers having little by way of deposit to put down, many are having to pay high interest rates to secure a mortgage.

At the end of February the interest rate on a two year fixed mortgage for 95% of the property value stood at 6.55%, and experts state that this was the highest it had been in nearly eight years, since 2000.

Due to having no existing property to sell first time buyers tend to have smaller deposits, and this means that they are only eligible for some of the most expensive mortgage deals.

With a greater number of lenders now demanding higher deposits from borrowers in order to give them access to more competitive deals it is likely that first time buyers will continue to suffer financially, as they will be penalised for not having a higher deposit by only being given access to the more expensive mortgage rates.

One industry official stated: ‘Banks are clearly now engaged in more active risk-pricing when it comes to mortgage lending, with riskier borrowers failing to benefit from the fall in expectations of policy rates. For first-time buyers this could clearly be a problem.’