Mortgage costs leap for first-time buyers

Paul Thomas For The Daily Mail

Mortgage rates for first-time buyers are creeping up over fears that house prices may fall.

Over the past six months lenders have slashed rates to record lows for borrowers with larger deposits.

But the average rate for someone with a 5 per cent deal rose from 3.89 per cent in January to 4.24 per cent, according to Moneyfacts. 

Over the past six months the average rate for someone with a 5 per cent deal rose from 3.89 per cent in January to 4.24 per cent

Over the past six months the average rate for someone with a 5 per cent deal rose from 3.89 per cent in January to 4.24 per cent

For a borrower with a 10 per cent deposit it has risen from 2.72 per cent to 2.77 per cent.

Banks and building societies told the Bank of England they want to lend less to those with smaller deposits over the next three months. 

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UK Finance says lenders are worried about house prices growing at less than two-thirds the pace they were a year ago.

If prices fell, those with smaller deposits may be trapped in negative equity, unable to move. 

Andrew Montlake, of mortgage broker Coreco, says: ‘Lenders may increase rates more for first-time buyers.’

p.thomas@dailymail.co.uk

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