Boost for first-time buyers as mortgage rates with 5% deposit hit record low

FIRST-TIME buyers will be pleased to hear that the interest rate on mortgages requiring just a 5 per cent deposit has fallen to record lows.

According to the latest data from the Bank of England, the average two-year fix at 95 per cent loan-to-value (LTV) fell to 3.22 per cent in November from 3.33 per cent in October.

While the average five-year fix at 95 per cent LTV has dropped to 3.79 per cent from 3.89 per cent.

In comparison, just a year ago a two-year fix would have cost 3.97 per cent on average, while a five year fix would have cost 4.58 per cent.

Go back to the start of the Bank of England's records, and a two-year fix would have cost 7.99 per cent in December 1995.

While a five-year fix would have stood at 9.48 per cent in January 1995.

The fall in rates comes despite the rising Bank of England base rate, which mortgage rates are typically based on.

Base rate rose for the first time in over a decade in November 2017 from 0.25 per cent to 0.5 per cent.

It then rose again to 0.75 per cent this August.

Here are the most affordable cities in the UK for first-time buyers - where it takes only seven months to save a deposit.

Plus, the £120,000 homes that single first-time buyers can afford to purchase on their own and without a deposit.

Meanwhile, we speak to first-time buyers who bought their £270,000 three-bed home 85 miles from their dream location to get on the housing ladder.

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