First time buyer mortgages with high LTVs in demand

First time buyer mortgages with high LTVs in demand

02 December 2009 / by Rachael Stiles

First time buyer demand for mortgages is surging, but nearly a third of searches at are for deals offering 80 per cent loan to value or more.

In October and November, the website recorded that 29 per cent of mortgage searches were from borrowers looking to borrow at least 80 per cent of the property value.

Around 8.5 per cent of all mortgage searches on the website in the two months were for mortgages between 90 per cent and 95 per cent LTV.

Borrowers are still paying a premium for having deposits of less than 20 per cent; those looking for 80 per cent LTV are paying an average 3.62 per cent compared to 6.4 per cent for those looking to borrow 90 per cent LTV.

There are some competitive mortgage deals around – borrowers with the average required LTV of 64 per cent will pay an average of 2.89 per cent – but those will small deposits continue to be frozen out of the mortgage market, making it difficult for first time buyers to get a foot on the property ladder.

But, according to, Francis Ghiloni, commercial director at, there are some home loans available for these borrowers if they are willing to pay the price. "First-time buyers with small deposits are returning to the market on the back of new deals from the likes of Royal Bank of Scotland," she said.

"It shows that confidence is returning to the market if lenders are willing to take the risk of 90% and 95% loans again and borrowers are confident enough to search for loans," Ms Ghiloni added.

However, those seeking first time buyer mortgages will continue to struggle until the underlying issues in the mortgage market are tackled, she continued, such as concerns regarding further house price falls, and pressure on lenders from regulators to hold more capital in reserve for higher LTV mortgages.

According to market analysis from, borrowers looking for 90% LTV mortgages can choose from lenders such as HSBC, Cheltenham & Gloucester, RBS, NatWest, Abbey, First Active, Saffron Building Society and Vernon Building Society. The lowest rate is from HSBC on its Lifetime Tracker, charging 5.19% with a £1,316 fee.

Borrowers looking for 80% LTV deals can choose from lenders including Post Office, NatWest, RBS, HSBC, Furness Building Society, Mansfield Building Society, Leek United Building Society and Manchester Building Society. The lowest initial rate is a Lifetime Tracker from Post Office at 3.09% with a £1,209 fee.

At 64% LTV the lowest initial rate is a 2.69% tracker from Abbey with initial fees of £230 and other competitive lenders include Woolwich, Alliance & Leicester, HSBC, First Direct and Northern Rock.

© Fair Investment Company Ltd