Are things looking up for first-time buyers?
Halifax has today launched a new mortgage deal for buyers with deposits of just 10 per cent. Sounds good so far. Any new opportunity for first-timers – recently the pariahs of the housing market – to get a foot on the ladder should be welcomed.
But there is one rather large drawback. The interest rate is a whopping 7.29 per cent fixed for three years. On a £250,000 property, this would mean monthly mortgage payments of almost £1,500, based on a loan-to-value of 90 per cent. Halifax claims to be one of the few lenders trying to accommodate first-time buyers. A spokeswoman acknowledged it was “crucial” to have products for new entrants so other homeowners can move up the chain. This is why “Halifax has always been out there in the market, almost alone in doing that”.
But given that potential buyers could rent a similarly priced property for about £500 less a month, and the fact that the recovery in property prices is still fragile, there seems little incentive for anyone to take up this kind of rate.
There are some slightly less painful alternatives for buyers with just 10 per cent in cash. NatWest is offering a rate of 5.99 per cent for five years, according to Moneyfacts.co.uk. This does not have a fee (Halifax charges a fee of £999). Meanwhile Mansfield Building Society has a three-year rate of 5.49 per cent and Clydesdale/Yorkshire Bank has a rate of 5.99 per cent for two years, both of which have £999 fees.
But given the help Halifax has had from the government to ensure its survival, should it not be more willing to assist first-time buyers, which after all are so crucial to getting the property market on its feet again?
Lucy Warwick-Ching
Matthew Vincent
Alice Ross
Ellen Kelleher
Steve Lodge
Josephine Cumbo
Tanya Powley
Jonathan Eley