Money Insider: New first-time buyer focus from Barclays and Virgin Money


If the first two weeks of the new year is a taster of what's to follow, the mortgage market will be the sector where banks and building societies focus much of their efforts in 2013. There has been a slow but steady fall in mortgage interest rates since the Funding for Lending scheme was introduced last autumn, but lenders are suddenly becoming far more aggressive with their pricing in order to maintain a decent market share.

In the last fortnight we've seen rate cuts from Yorkshire Building Society, Nationwide Building Society and Leeds Building Society, but the high-profile moves by Barclays, slashing rates by up to 1%, and Virgin Money cutting some 90% LTV deals by up to 1.30%, reflects the increased desire for new business.

The stand-out new products include a two-year fix from Yorkshire BS at 1.99% with £995 fee for loans of 60% LTV, but it's the renewed appetite to help first-time buyers that's most encouraging.

It's not just a matter of cheaper deals from mutuals for those with a stake of 10% or less, we are starting to see cheaper deals and more innovation from the big banks too.

Barclays is a prime example, and has just launched its excellent new Family Springboard mortgage for first-time buyers with just a 5% deposit.

The home buyer has to find a 5% stake and their parents/family deposit must deposit a further 10% of the purchase price in a linked Barclays Helpful Start savings account for three years.

In return, the borrower gets a three-year fixed mortgage rate at 4.69%, and the family earns base rate plus 1.50% AER (currently 2% AER) on their savings. At the end of the three-year mortgage deal the savings will be returned with interest, provided the mortgage payments are kept up to date.

Although first-time borrowers with small deposits need to be aware that they are more susceptible to negative equity issues, with rental costs still soaring there will be no shortage of takers for this new Barclays deal.

It's never been an issue of not being able to afford the ongoing monthly repayments; it's finding the deposit that's proved the insurmountable hurdle for many.

Research released this week by Castle Trust revealed that even in the cheapest areas for housing a 20% deposit means having to save up around £15,000, and even excluding London there are many areas where you'd need to amass between £30,000 and £40,000, so it's easy to see the need for innovative solutions.

The Barclays Family Springboard deal is similar to the Lend a Hand initiative from Lloyds TSB, where although the mortgage rate is slightly lower, at 4.4%, it requires a more onerous 20% stake from family members, and therefore is out of reach for some parents.

With Virgin Money slashing rates on 90% home loans too, there's growing evidence that lenders are starting to move away from the safe haven of 60% LTV lending to a less congested higher risk market where better margins can be found. It's positive news for those who still have a dream of home ownership, and hopefully this focus on borrowers who have been crying out for affordable options will provoke a reaction from other high street lenders.

The competition for new business is good for existing borrowers too, and for anyone still on their lender's standard variable rate (SVR), now is a good time for a serious look at some of the lowest fixed rates we've ever witnessed.

With the average SVR at 4.6% APR, there are potentially big savings to be made and the opportunity to lock in at much cheaper rates for up to 5 years, so speak to an independent mortgage broker to check out what deals may be suitable for your circumstances.

Will loan rates dip below 5%?

The battle between personal loan providers rumbles on, particularly for borrowers with an A1 credit score. Tesco Bank and Clydesdale/Yorkshire Bank have been the front runners this year, with the latter cutting its rate to its lowest ever level at 5.1% APR for loans of £7,500 plus. Two years ago, the best deals were around 6.7% APR. While the cost of larger loans is falling, those looking for smaller sums of £2,000 to £3,000 still face rates of between 20% APR and 30% APR in some cases, so it's worth checking out peer-to peer lenders such as Zopa or RateSetter for cheaper deals.

Andrew Hagger is a personal finance analyst at

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

    Gaping hole at the heart of the European Union

    Treatment of Greece has shown up a lack of genuine legitimacy
    Number of young homeless in Britain 'more than three times the official figures'

    'Everything changed when I went to the hostel'

    Number of young homeless people in Britain is 'more than three times the official figures'
    Compton Cricket Club

    Compton Cricket Club

    Portraits of LA cricketers from notorious suburb to be displayed in London
    London now the global money-laundering centre for the drug trade, says crime expert

    Wlecome to London, drug money-laundering centre for the world

    'Mexico is its heart and London is its head'
    The Buddhist temple minutes from Centre Court that helps a winner keep on winning

    The Buddhist temple minutes from Centre Court

    It helps a winner keep on winning
    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate
    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'