Slower mortgage rate increases for first-time buyers with bigger deposits


First-time buyers with larger deposits are in a significantly better position than those without, as the cost of a two-year fixed rate for those with a 10% deposit is rising at a slower pace than for those with less capital, according to

While the average two-year fixed-rate for first-time buyers (FTBs) needing a 95% loan-to-value (LTV) mortgage has increased by 0.05% to 3.28% since September, FTBs with a 10% deposit have only seen an increase of 0.01%, taking the average rate for a 90% LTV mortgage to 2.65%. This means first-time buyers with a substantial 10% deposit can get access to rates 0.63% less than their 95% LTV borrowing counterparts.

At present, 95% LTV rates are rising faster than any other tier, with the rate gap between 95% and 90% LTV loans likely to widen even further over the next few months. Darren Cook, finance expert at Moneyfacts, said: “It appears that mortgage providers may be factoring in a larger proportion of default risk into rates at higher LTVs, where, among other things, competition and lower wholesale funding costs seem to be benefiting borrowers with a greater equity stake in their property.

“The difference in average rates between 90% and 95% LTVs has historically always been greater than differences in average rates between LTVs lower down the tier scale, so it is always worthwhile for a potential FTB to try to raise an additional deposit and attempt to step down the ladder to find a mortgage at lower interest rates.”

Falling rates for lower LTVs

Over the past six months, borrowers looking at lower LTV rates will have actually benefited from falling (not increasing) rates unavailable to 95% LTV buyers; at 85% the rate has dropped by 0.02%, at 80% by 0.06% and at 75% LTV again by 0.02%. First-time buyers that can afford to put down a heftier deposit could benefit from the falling two-year fixed rate at 60% LTV, which has dropped by 0.04% to 1.80% and is 0.11% lower than in April this year.

The good news for first-time borrowers restricted to 95% LTV mortgages is that there is a choice of 107 two-year fixed-rate mortgage products, of which 98 offer 35 or 40-year terms and a massive 94 products offer loans up to a maximum age of 75 years and above at the end of the term.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800


Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator


Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.


Not a member? Sign up for free


Slower mortgage rate increases for first-time buyers with bigger deposits


By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.