Hope for First Time Buyers as lenders introduce new products and cut rates
The major lenders are cutting rates and reintroducing products suitable for buyers with small deposits, in a sign that some normality is returning to the property market following the post-lockdown surge.
Many lenders notched rates up or withdrew products at 85% loan-to-value (LTV) and above following the first lockdown. At the time, the banks were struggling to manage an influx of new business from buyers, all while adjusting to the effects of the pandemic, including remote working.
Now it appears that surge is easing. The latest RICS Residential Market Survey suggests property market momentum slowed in December, as restrictions on movement were tightened and the end of the Stamp Duty Holiday drew nearer. As a result, major lenders are now cutting rates.
Rates are subject to frequent changes, however at the time of writing, two-year fixed products at 85% LTV are available at as low as 2.69%.
Hina Bhudia, parter at Knight Frank Finance, said: "It's clear the major lenders have been busy over Christmas working through a backlog of applications that had built up through the lockdown and subsequent surge in activity.
"That's why the biggest banks have been reintroducing products at higher LTVs and, more importantly, dropping rates back to levels that are feasible for many more first time buyers.
"Dropping rates suggests the banks are getting the numbers of applications they are dealing with back to more manageable levels. They've also started the year with new targets and are taking the opportunity to gain market share.
"Whether this continues will depend on the scale of the rush to get applications in ahead of the end stamp duty holiday, due to end in March."
If you're a first time buyer and need advice on your mortgage, or you'd like to discuss different mortgage requirements, do get in touch.