Low fixed-rate mortgage deals are unlikely to benefit first time buyers 
(26/06/2010)
Lenders have been under increasing pressure to cut their rates because the Bank of England has kept the base rate at a record low of just 0.5 per cent since March 2009. With the base rate expected to once again be held at 0.5%, all signs point towards improved affordability for those wishing to buy a property.
The latest Bank of England figures show increased competition in the mortgage market, with fixed rates now at their lowest level since 1995. Average interest rates charged on a two-year fixed-rate deal for a borrower with a 25 per cent deposit dropped to 3.8 per cent this month.
Alison Beech, Business Relationship Director, Spicerhaart comments: “May’s record-low fixed-rate mortgage deals are a positive thing for the housing industry as a whole, but are unlikely to benefit first time buyers.
“Fixed rate mortgages are an attractive option for borrowers who want to be certain of their payments, or who fear interest rates may start to rise. Borrowers with little equity or small deposits are likely to be the ones who benefit the most from a low rate fixed term mortgage, but with 25% of the properties’ value required to secure the loan, for many hoping to get a first foot on the ladder this will still be out of reach.
“Only borrowers with significant deposits or those looking to remortgage will be in a position to take advantage of these historically low mortgage rates.”
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