Despite the record low mortgage rates currently on offer, first-time buyers with smaller deposits are actually having to pay more than at the beginning of the year.
Research from moneyfacts.co.uk shows the average two-year fixed rate for borrowers with a 5% deposit has increased by 0.10% since April and a shocking 0.35% since the start of the year.
This compares to 0.2% rise since April and 0.5% since the start of the year for borrowers with a 10% deposit.
This means it is £29.10 a month more expensive to take out a mortgage today compared to the start of the year.
Charlotte Nelson, finance expert at moneyfacts.co.uk, said it disappointing news for first-time buyers who have struggled to get a deposit to now find rates are starting to rise.
“The increase can be largely explained by the inflationary pressures the economy is facing. As inflation rises, borrowers’ incomes get eaten away and the probability of a borrower defaulting rises. The added speculation of a possible base rate rise in the near future has seen providers re-evaluate the lows that borrowers were starting to get used to.
“First-time buyers might feel like they can never catch a break, facing large deposits and now rising rates, but it is not all doom and gloom, with more deals on the market at current than at any time since the financial crisis.
“With the Bank of England scrutinising high LTV lending, this upward pressure on rates looks like it may continue. So borrowers looking for a deal at a higher LTV will need to act now if they want to make the most of low rate deals before their time is up.”
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