By Laura Harding
First-time property buyers face a substantial rise in interest rates and mortgage arrangement fees compared with this time last year, according to analysis by the mortgage advice website mform.co.uk.
People hoping to buy their first property – aged in their early thirties, on average – are struggling to amass the large deposits required as a result of the recent boom in house prices. And where they can't afford to put much money down, the cost of borrowing is both higher and rising. In March 2007, the average interest rate on the top five first-time-buyer mortgages was 5 per cent – compared with 5.8 per cent in March this year.
The study by the website estimates that the average first-time buyer will see their annual mortgage repayments increase by around 16 per cent – almost £1,000 a year.
At the same time, arrangement fees on home loans have shot up, and lenders have increased the deposit required on their best-value deals to as high as 25 per cent.
Francis Ghiloni, marketing and business development director at mform.co.uk, said: "These are tough times for first-timers. Lenders are generally asking for larger deposits, and with both arrangement fees and interest rates on the up, borrowers will need to be sure about their ability to meet these commitments before they can take a step on to the property ladder."Reuse content