With some predicting a fall in house prices following the EU referendum vote, many potential first-time buyers are poised to take advantage of the moment to get themselves on the first rung of the housing ladder. However they might be disappointed, with research from Moneyfacts.co.uk showing a number of 95% loan-to-value (LTV) products disappearing from the market.

Charlotte Nelson, Finance Expert at www.moneyfacts.co.uk, said:

“It’s disappointing news for first-time buyers that the number of 95% LTV products has fallen by 16% in just five months. It is particularly bruising when many hope that the predictions of cheaper houses would help them realise their dream sooner than expected.

“Unfortunately, a downturn in property prices can have a significant impact on the higher LTV mortgage sector. A negative turn in prices effectively depreciates the provider’s resale value of the bricks and mortar, which results in providers reeling in their criteria and paring back their offerings to this section of the market.

“With many uncertainties in the market, providers might be treading carefully and more cautious about what they choose to offer the higher risk borrower, such as high cash incentives and multiple product options.

“It is still unknown what effect the Help to Buy Mortgage Guarantee scheme ending this year will have, but the number of products at 95% LTV is likely to dwindle yet again, providing a further blow to borrowers with small deposits who were getting accustomed to the plethora of choice they had.

“It’s not all bad news for first-time buyers; mortgages at 95% LTV have fallen to all time lows. For example, the average two-year fixed rate at 95% LTV has fallen from 4.44% to 4.04% today. This represents a £44.76* a month saving if borrowers took out a mortgage today compared to a year ago.

“Whilst it may feel that the odds are stacked against the first-time buyer, the 95% LTV market has seen a marked improvement from even a few years ago. So borrowers should take advantage of the deals available now, to avoid perhaps being disappointed in the future.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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