Building societies price lower on average on first-time buyer mortgages than other lenders, new data from Moneyfactscompare.co.uk has shown.
When comparing mortgages, buyers making their first step onto the property ladder will find building societies typically have lower rates for fixed 90% and 95% loan-to-value (LTV) deals, the new data shows.
These are mortgages for borrowers who need to borrow 90% or 95% of their property’s value and therefore require 10% or 5% deposits.
Moneyfactscompare.co.uk said out of the seven biggest high street banks, the average rates combined were actually lower than building societies’ (90% and 95% loan-to-value, for two- and five-year fixed mortgages for first-time buyers). But, it said, the lowest rate deals might not be the best on a true cost basis.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Mortgage affordability remains a key issue among first-time buyers, who may be struggling to see how they can make their homeownership dreams a reality. The government needs to propel its homebuilding plans, or we could be set for a rise in house prices.
“The good news is that mortgage rates have been coming down and this can give buyers more of a chance to secure a deal.
“Building societies are working hard to support new buyers, with two- or five-year fixed rate deals available to first-time buyers with a 5% or 10% deposit charging less on average compared to the market average in the same space.
“However, the biggest banks traditionally have more margin to price their mortgages lower, which is why they are undercutting the mutuals. Indeed, seven banks (Barclays, Halifax, HSBC, Lloyds Bank, NatWest, RBS and Santander) are priced lower, on average.
“Despite this, mutuals can tailor their ranges to provide best choice for those with small deposits when all the costs and incentives associated with the mortgage are included. Mutuals can also be more driven to create innovating products, such as the Track Record Mortgage from Skipton Building Society.”
According to The Building Societies Association (BSA), two-thirds of first-time buyers said mortgage affordability was the biggest barrier to buying a home (65%). Raising a deposit was also highlighted as a significant obstacle to homeownership by 62% of would-be homebuyers.
| Moneyfacts mortgage market analysis of deals available to first-time buyers (Source: Moneyfactscompare.co.uk) | |||
| Average fixed rates and product counts | All lenders | Building societies | Barclays, Halifax, HSBC, Lloyds Bank, NatWest, RBS and Santander |
| Average two-year fixed rate at 90% LTV | 5.50% | 5.20% | 4.70% |
| Average two-year fixed rate at 95% LTV | 5.61% | 5.41% | 5.06% |
| Average five-year fixed rate at 90% LTV | 5.33% | 5.01% | 4.61% |
| Average five-year fixed rate at 95% LTV | 5.53% | 5.29% | 4.98% |
| Two-year fixed deals at 90% LTV | 206 | 61 | 31 |
| Two-year fixed deals at 95% LTV | 122 | 48 | 16 |
| Five-year fixed deals at 90% LTV | 234 | 64 | 30 |
| Five-year fixed deals at 95% LTV | 148 | 57 | 17 |
| Data correct as at 30.5.25. Deals shown are available to first-time buyers, but not exclusive to them, deals exclude adverse credit options. NatWest includes deals through its intermediary arm. Source: Moneyfactscompare.co.uk | |||
