Cheaper 85% mortgages boost first time buyers

Katie Tucker, Technical Manager at Mortgageforce comments: "85% deals bounced back in November.  Without them, half of the first time buyers we helped would have been facing the high monthly payments of the sparse 90% deals, or simply would not have been able to get on the ladder.

"Any lenders are increasingly able to take more risk now as their capital adequacy has improved.  Also, their conservative attitudes thus far have resulted in their book of clients having very low average loan to value ratios."

Mortgageforce's figures also show that deposits demanded from first time buyers eased in the last 6 months, on average they contributed 28% of their own cash, but in November they were able to put in a much lower average 24%.

Tucker continues: "The more affordable 85% deals are also helpful to those buyers who have more cash available but choose to borrow a little more on the mortgage.  The mortgage rates are relatively cheap compared to other credit and, whilst it is secured borrowing, the last thing you want is to start off by racking up five thousand pound in home furnishings on a costly credit card if you can keep cash aside for it instead."

Best buys

Borrowers should use a mortgage broker to search for 85% deals as smaller building societies with geographical restrictions are competing against Abbey, Halifax and Nationwide prices this week.  The Ipswich, Nottingham, Leeds, Tipton & Coseley and Cambridge all have 2 year fixes between 5.6 and 5.9%."