Earlier this week, Nationwide announced it was decreasing its maximum loan-to-value (LTV) on its fixed and tracker rate mortgages from 90 per cent to 75 per cent.
This decision, blamed on a 'cooling housing market' means that first time buyers wanting a tracker or fixed rate mortgage
will now have to find a deposit of at least 25 per cent if they want a deal with Nationwide, or face a higher lending rate.
But Nationwide wants to reassure first time buyers that they are still offering a good deal, especially to those with small deposits.
continue to offer excellent value for first time buyers and those looking to borrow up to 95% of the value of their property, said Matthew Carter, director of Mortgages at Nationwide.
"Customers should be aware that the headline interest rate is not all they pay and must also take into account the fees and charges that form part of their mortgage deal," he explained.
"Buying your first home is an exciting experience, which shouldn’t be spoiled by paying more than you need to for your mortgage. We urge first time buyers to shop around and compare the cost of each deal before committing, it could make a big difference."
But, with Nationwide, first time buyers looking for a two year fixed rate on a mortgage of £150,000 with an LTV of 90 per cent will pay a rate of 6.45 per cent and a reservation fee of £499; the Post Office says its deal is much better.
The Post Office's three year fixed rate deal was reduced to 5.64 per cent in November, 5.48 per cent in January and has now dropped to 5.34 per cent with a fee of £399.
"Our three year deal offers a low-cost product that guarantees customers peace of mind with one of the lowest fixed rates on the market, coupled with a low arrangement fee," said Gary Fitton, director of lending.
Katie Tucker product manager at Charcol mortgages says that it is important to weigh up all the different deals before you buy.
"There are lenders still offering 100% and 95% mortgages, for now, and borrowers should seek advice from a whole-of-market mortgage broker very soon if they want one. Newcastle has a 95% fixed rate at 5.25% crucially, with no Higher Lending Charge for a £999 arrangement fee.
"For remortgages up to 75%, Abbey has a market leading 4.99% two year fix for a fee of £2,999 with free valuation and legals. For borrowing up to 90%, West Bromwich has a ten year fix at 5.39% for a fee of £999, including free valuation and legals on remortgages," she said.
Ms Tucker she expects variable rates to offer best value for many people because she expects further cuts to Bank rate later in the year, suggesting the The Cheshire, which is offering a 2.15 discount from its SVR for two years, giving a pay rate of 5.19% and the Early Repayment Charge-free 5 year tracker from Charcol which has a rate of 5.64% for a fee of £799.
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