Greater mortgage choice for buyers with low deposits
The choice of mortgages for people with only low deposits saved is at its widest in nearly eight years - and the average rates on offer have also plunged to record lows - a financial information website has found.
The growing choice of deals comes as the average two-year fixed-rate mortgage for someone with a 10% deposit has fallen below 3% for the first time on Moneyfacts.co.uk's records.
There are now 845 products on the market for people with deposits of 5% or 10% across the UK - marking the highest number Moneyfacts has seen since April 2008, when 1,119 products were available.
Six months ago, 764 products were available to people with deposits of 10% or less according to Moneyfacts, whose records go back 26 years.
The choice of deals available has more than tripled compared with five years ago, in the aftermath of the economic downturn, when just 239 products were on offer for people with deposits of 5% or 10%.
Charlotte Nelson, a finance expert at Moneyfacts.co.uk, said: "Competition in the overall mortgage market has seen rates plummet to record lows, including in the 90% and 95% LTV (loan-to-value) sectors.
"For example, the average two-year fixed rate at 90% LTV has fallen from 4.27% two years ago to just 2.99% today - the first time the average has ever dipped below 3%.
"The average two-year fixed rate at 95% LTV has also dramatically fallen, dropping from 5.22% to 4.17% over the same period. So, not only can borrowers benefit from greater choice, but they can also profit from highly competitive rates."
The launch of schemes such as Help to Buy, which allows people to get on or move up the property ladder with deposits as low as 5%, has helped to boost competition between lenders at the low deposit end of the market.
And experts believe that interest rates could stay low for some time yet, helping to keep people's borrowing costs down.
The widened availability of these mortgages will bring further cheer to would-be first-time buyers, after property website Rightmove recently reported signs that more homes in their bracket are coming on the market.
Rightmove said the volume of homes with two bedrooms or fewer coming to market was up by 10% in February compared with the same month in 2015. Homes of this size are typically sought by first-time buyers.
But official figures recently showed that first-time buyers faced paying 6.4% more for a property in December 2015 than they would have paid a year earlier. The average price paid for a starter home in December 2015 was £219,000, according to the Office for National Statistics (ONS).
And according to recent English Housing Survey data, the average first-time buyer now need to put down a deposit of £42,505.
In 2014-15, the average age of first time buyers was 33 years old, up from 31 a decade earlier, according to the English Housing Survey.
Ms Nelson said the UK-wide Help to Buy mortgage guarantee scheme has helped to make lending to people with small deposits "socially acceptable again".
She continued: "The increase in the number of deals means that lenders aren't just pedalling standard products, either, but are instead offering an array of incentive packages and fees, allowing borrowers to tailor their mortgage to their needs.
"This is a fantastic development for first-time buyers who had previously struggled to find an eligible deal - let alone an attractive mortgage package."