Act now or risk missing out as lenders slash rates for first-time buyers

Small deposit, no problem

If you’re looking for the best mortgage for first time buyers then you are spoilt for choice this month. Lenders have cut the rates of mortgages for buyers about to take there first step on the property ladder.

Related: Halifax has launched a new mortgage with a rate below 1 per cent

First time buyers can’t always cobble together a large deposit. But if you have enough for a 5 or 10 per cent deposit now is the time to act and get a mortgage.

Best mortgage for first time buyers

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Banks and building societies are cutting the mortgage rates of buyers with a small deposit. This is great news if you are just getting your first foot onto the property ladder.

front of facebrick house showing front door and bay window

(Image credit: Future PLC/Colin Poole)

For a person borrowing 95 per cent of their home’s value, the average cost of a two-year fixed rate mortgage has fallen to 3.25 per cent! That is 0.02 per cent less than in November.

However if you are able to put down a 10 per cent deposit you are in even better luck. The rates have dropped by 0.04 per cent to 2.62 per cent.

The drop in mortgage rates comes as competition between banks and building societies heats up. This usually happens around this time of year as lenders try to meet their end of year targets.

wooden table and chair at entrance of home

(Image credit: Future PLC/Colin Poole)

Competing for business, lenders have turned their attention to first-time buyers by slashing their rates. This is great news for first-time buyers with small deposits.

‘First-time buyers or those borrowers seeking higher LTVs seem to have benefited the most during November, as providers appear to be once again competing for this business by driving interest rates down,’ Darren Cook, finance expert at Moneyfacts told Zoopla.

Not only will first-time buyers benefit by saving money thanks to the rate reductions. But with less money going out each month on mortgage repayments; they’re more likely to pass the lenders affordability tests.

grey sofa beside fireplace and coffee table inside living room

(Image credit: Future PLC/Oliver Gordon)

If you are looking to take advantage of these new mortgage rates as a first-time buyer check out Post Office Money. They are currently offering the best buy rate for buyers with a 5 per cent deposit at 2.73 per cent.

However, if you are able to put down a 10 per cent deposit, Natwest and Royal Bank of Scotland are the best mortgages for first-time buyers offering a rate of 1.84 per cent.

Related: Why Martin Lewis is sceptical about new rules that promise to free 1,000s of mortgage prisoners

Will you be treating yourself to a house this Christmas?

Rebecca Knight
Deputy Editor, Digital

Rebecca Knight has been the Deputy Editor on the Ideal Home Website since 2022. She graduated with a Masters degree in magazine journalism from City, University of London in 2018, before starting her journalism career as a staff writer on women's weekly magazines. She fell into the world of homes and interiors after joining the Ideal Home website team in 2019 as a Digital Writer. In 2020 she moved into position of Homes News Editor working across Homes & Gardens, LivingEtc, Real Homes, Gardeningetc and Ideal Home covering everything from the latest viral cleaning hack to the next big interior trend.