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First time buyer mortgage applications up as high LTV deals make a come back

28 January 2009 / by Rachael Stiles
After a dry spell caused by high interest rates and low availability as a result of the credit crisis, first time buyers are now coming back to the mortgage market.

First time buyer mortgages now account for 40 per cent of applications at mortgage website, compared to just 10 per cent in October last year. says that this is, in part, due to a thaw in the 90 and 95 per cent loan to value (LTV) mortgage market, which was previously frozen due to a lack of willingness to lend amongst the banks.

While the banks are still reluctant to lend, the reintroduction of higher LTV deals and falling interest rates have helped to make mortgages more affordable for first time buyers, says.

First time buyers without a large deposit now have more choice than they have had in recent months; two weeks ago there were 18 lenders offering 90 per cent loan to value deals, but there are now 21 lenders offering 75 such deals.

There are even three mortgage lenders offering 95 per cent LTV – Clydesdale Bank, Abbey, and Ipswich Building Society.

But while availability might have improved and rates have come down slightly, these high loan to value mortgages are still expensive, mform warns, charging considerably higher rates than on comparable deals at 80 per cent LTV.

Derbyshire Building Society is currently offering a rate of 4.99 per cent – the best fixed rate deal on an 80 per cent loan – and at 3.39 per cent the best tracker mortgage for this LTV is from First Direct.

"Falling house prices are providing a boost for first-time buyers and there are signs they are coming back into the market." said Francis Ghiloni, marketing and business development director of "In October it looked like first-time buyers were about to disappear but since then we’ve seen real signs of a revival and a general rise in applications.

"However rates above 80 per cent loan-to-value remain high and fees add considerably to the burden. With forecasts that house prices will continue to fall lenders remain nervous but are perhaps just a bit less nervous than they were."

Mform found that there are currently twice as many lenders and three times as many products on the market for homebuyers looking for an 80 per cent mortgage compared to the number of loans available for those who just have a 10 per cent deposit.

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