Since the EU referendum first-time buyers have been the biggest losers when it comes to interest rate cuts, new figures show.
According to the latest AmTrust Moneyfacts LTV tracker, average rates have fallenl three times faster for those with bigger deposits compared to those with small deposits since the EU referendum.
Following the Bank of England’s decision to lower the Bank Base Rate to 0.25% in August, mortgage rates fell across the board.
However, the average cost of a high LTV loan is falling at a much slower pace with the 0.05 percentage point decline for a 95% LTV mortgage in the last three months, a third of the 0.15 percentage rate drop for 75% LTV mortgages.
Lower rates mean first-time buyers can save more than £384 compared to a year ago, however borrowers in the 90% LTV band can now save £528 over the same 12-month period.
Since August, the number of loans available for borrowers with a deposit of 5% fell from 247 to 239 – a drop of 3% – another sign the market is shifting away from the first-time buyer.
In contrast, there were 747 products available for borrowers with a 25% deposit in October, the highest number since November 2015 and an increase of 8% from 689 in June.
Simon Crone, commercial directorof AmTrust International, mortgage and special risks, said: “The drop in the price of mortgages is a welcome development for borrowers but the worry is the EU vote has led to a market distortion at the expense of first-time buyers with small deposits. The early signs are that borrowers with small deposits may not be benefiting as much because of less competition as lenders reassess their risk appetite and rely upon those with larger deposits instead.
“It would be a great shame if the positive steps taken by the industry and the Government to improve lending to first-time buyers, after a calamitous collapse in the wake of the financial crisis, was undone over the months ahead. The next few months will be a key period as lenders decide on their risk strategies in this sector and the Help-to-Buy Mortgage Guarantee Scheme comes to an end.
“The end of the Help to Buy Mortgage Guarantee Scheme and the EU referendum result should not mean the end of healthy levels of high LTV lending. Private mortgage insurance is a powerful tool that lenders can use to support lending at high LTVs while protecting the taxpayer by minimising systemic risk and keeping lending standards high.”
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