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First time buyer have more choice as mortgage deals double

The number of 10% deposit mortgage deals almost double as lenders offer first time buyers more choice to get on the property ladder.

Lenders have increased the number of mortgage deals with 90% loan to value (LTV) to first time buyers from 88 last month to 160 in January 2021 offering more choice, according to Moneyfacts.

The two-year and five-year fixed and variable deals on offer decreased after the coronavirus lockdown as lenders were concerned with the economic risk for high loan to value mortgages.

Fixed rate mortgage deals requiring a 5% deposit reduced from 279 in March to only 22 in May 2020 and for 10% deposits reduced from 563 in March to only 50 two months later.

Interest rates falling slowly

Mortgage interest rates for the average two-year fixed deals at 90% LTV are slightly lower reducing from 3.79% in December to 3.65% in January 2021.

This compares to the lowest average rates of 1.99% in July for two-year fixed deals compared to pre-lockdown rates of 2.57% in March and have since increased 1.08% from this level.

This Moneyfacts table is for 90% LTV mortgages for 2-year and 5-year fixed rates and the product numbers from March to January 2021.
Date Mar-2020 Dec-2020
Product numbers 779 88 160
2-year fixed 2.57% 3.79% 3.65%
5-year fixed 2.91% 3.92% 3.79%
For 90% LTV five-year fixed deals the average interest rates last year were 2.24% in July compared to March at 2.91% increasing to 3.79% in January.

Fixed rates of 2.4% and upwards are available for older equity release buyers using a lifetime mortgage to release cash for anything such as a loft conversion or gift to a family member.

Interest rates for remortgage buyers are lower allowing them to release capital for home improvements and with a 75% LTV two-year fixed deal the lowest rate is 1.49%.

Rates rise for 75% LTV mortgages

For home movers with a larger 25% deposit have increased by 0.01% for two-year fixed rates with 75% LTV mortgages rising to 2.27%.

This will be disappointing for homebuyers as many are finalising their purchases ahead of the stamp duty holiday ending on 31 March although the five-year fixed rates are 0.03% lower at 2.38%.

The Moneyfacts table is for 75% LTV mortgages for 2-year and 5-year fixed rates and the product numbers from March to January 2021.
Date Mar-2020 Dec-2020
Product numbers 845 621 629
2-year fixed 2.29% 2.26% 2.27%
5-year fixed 2.56% 2.41% 2.38%
With a larger 25% deposit the risk to lenders is lower with the number of products in March last year of 845 and slightly lower of 629 in January.

For buy-to-let investors the rates have remained competitive with rates as low as 1.60% for a 60% LTV two-year fixed rate deal as landlords must show satisfactory rental income to lenders.

Staying at home during lockdown has driven people to move with new priorities of more indoor and outdoor space, with higher demand for larger properties likely to continue this year.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or a buy-to-let investor.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to help your children start or expand a business.

Learn more by using the property value tracker chart, mortgage costs calculator and equity release mortgage calculator. Start with a free mortgage quote or call us and we can take your details.


Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%
1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%
1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%
1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%

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    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


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