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Best 10% deposit mortgages: What are the top rates for first-time buyers?

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Mortgages needing 10 per cent deposits are continuing to return to the market, in a welcome move for first-time buyers.

Lenders have launched 117 new products since the beginning of the year, and 29 in the first two weeks of February alone, according to information website Moneyfacts.

These lower-deposit mortgages are popular with first-time buyers, but are also used by homeowners who have low equity for other reasons.  

Mortgages with 10 per cent deposits are most often used by first-time buyers

Mortgages with 10 per cent deposits are most often used by first-time buyers

There are now 277 10 per cent products on the market, which is still far lower than than the 776 that were on offer a year ago in February 2020.

However, it is a big improvement compared with the 44 deals that were available in September 2020.

Most lenders withdrew their higher loan-to-value mortgages from the market around the time of the first national lockdown in mid-2020.

They cited worries about their capacity to deal with new applications when staff were working from home as the main reason, however there would also have been concerns about changes to people’s financial circumstances and the risk of negative equity.

Five new lenders have entered or re-entered the market since the beginning of this month, and 15 if you count both January and February.

First-time buyers with a 10 per cent deposit will also find more cashback offers on the market today, rising from 50 to 83 over the past month, available from 17 lenders compared to 12 in January. 

It is not all good news for those trying to get on the property ladder, though. 

While lenders have been slowly reducing their rates since they re-entered the market, they remain relatively high compared to other products in the market, as well as to 10 per cent mortgage rates pre-pandemic.

The average two-year fixed rate mortgage with a 10 per cent deposit now has an interest rate of 3.56 per cent, almost one percentage point more than in February 2020. 

While the five-year fixed rate equivalent at 3.68 per cent has dropped by 0.04 per cent since the start of the month, it is also 0.77 per cent above the February 2020 rate.

In contrast, those with 40 per cent deposits are currently enjoying rates of less than 1.2 per cent. 

And while the outlook is improving for those with 10 per cent deposits, there are still few mortgages available for first-time buyers with only five per cent to pay up front.

There are some products on the market, but most are only open to existing borrowers looking to remortgage, or require a guarantor.

Mortgage products available. Figures apply to first day of the month unless otherwise stated

Mortgage products available. Figures apply to first day of the month unless otherwise stated

Eleanor Williams, finance expert at Moneyfacts, said: ‘While average rates – historically often higher than those available in lower LTV brackets due to risk – are above where they were a year ago, those for whom the longer-term stability of a five-year fixed may suit their circumstances may be pleased to note this rate has reduced 0.04 per cent since the start of this month alone.

‘There are of course still hurdles for these borrowers to overcome. House prices inflated quite significantly last year – although early indications are this may be slowing in 2021 – and savings rates have continued to descend to rock bottom lows, making building a larger deposit difficult, as have high rental payments. 

‘But their options have been steadily increasing, and added to the news that the homebuyers using the current Help to Buy equity loan scheme have a further extension on the deadline for completions, there is hope that 2021 may see more potential home-buyers take that first step onto the property ladder.’ 

The best low deposit rates

Here are some of the best rates currently available to those with a 10 per cent deposit:    

Lloyds has a two-year fixed rate of 3.39 per cent with no fee. 

HSBC  has a two-year fixed rate of 3.44 per cent with no fee.   

Natwest has a two-year fixed rate of 3.48 per cent with no fee.  

Platform has a two-year fixed rate of 3.19 per cent with a £749 fee.  

Use our calculator to weigh up fees versus rates and find the best deal

HSBC accepting bonuses as income for applications 

In further evidence that mortgage providers are gradually broadening their horizons, HSBC said yesterday that it would begin accepting commission and bonuses as a valid form of income in mortgage applications again.

The lender made changes to its variable pay policy to allow income from commission and overtime, in addition to quarterly, half-yearly or annual bonus payments, to be used to support mortgage affordability. 

However, the most recent payment must have been received in 2021.

Michelle Andrews, HSBC UK’s head of buying a home, said: ‘We are all looking forward to normality returning, and the inclusion of overtime, commission and bonuses to support a mortgage application is one bit of normality that will be welcomed by many looking to move on to or up the property ladder.’

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Homes near Elizabeth Line see asking prices double in a decade

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Asking prices for properties for sale near stations on London‘s new Elizabeth Line have more than doubled in a decade, new research has revealed.

Many areas near stations on the capital’s new high-speed line were previously less well connected to key commuter hubs, such as Liverpool Street or Paddington stations.

But they have seen a surge in property asking prices amid new interest from homebuyers and tenants due to the better transport links that the Elizabeth Line provides.

REVEALED: The asking price hotspots around the new Elizabeth Line stations

REVEALED: The asking price hotspots around the new Elizabeth Line stations

Elizabeth Line hotspots: This two-bed flat in London's Windmill lane is o.2 miles from Maryland station and is for sale for £395,000 via Filtons estate agents

Elizabeth Line hotspots: This two-bed flat in London’s Windmill lane is o.2 miles from Maryland station and is for sale for £395,000 via Filtons estate agents

The new figures from Rightmove revealed the extent to which asking prices have risen in local areas around Maryland, Abbey Wood and Stratford stations.

Maryland Station in Newham, which provides an additional option for those commuting near well-connected Stratford, has seen the biggest jump in asking prices.

They have more than doubled compared to ten years ago, rising 108 per cent from £233,480 to £486,235.

This compares to the London average increase over the past ten years of 55 per cent.

About half a mile from Abbey Wood station is this two-bed flat for sale for £235,000 via Your Move estate agents

About half a mile from Abbey Wood station is this two-bed flat for sale for £235,000 via Your Move estate agents

Rightmove has identified the asking price hotspots around the new Elizabeth Line stations

Rightmove has identified the asking price hotspots around the new Elizabeth Line stations

Meanwhile, Rightmove revealed that total buyer demand has risen the most in western areas, while prices and competition has risen most in eastern areas.

Twyford, at the end of the western section of the line and the next stop along from Reading, has seen the biggest jump in the number of buyers contracting estate agents.

Numbers have more than tripled compared to 10 years ago, up 245 per cent.

Those looking to buy near Abbey Wood station, at the end of the South East section of the line, face the stiffest competition from other buyers.

Competition in that area has soared more than nine times and is up 869 per cent.

Rightmove has identified buyer demand hotspots around the new Elizabeth Line stations

Rightmove has identified buyer demand hotspots around the new Elizabeth Line stations

The increase in buyer competition compared to ten years ago around the new Elizabeth Line has been revealed

The increase in buyer competition compared to ten years ago around the new Elizabeth Line has been revealed

Near Custom House station: This two-bed house is for rent for £1,700 a month via Outlook lettings agents

Near Custom House station: This two-bed house is for rent for £1,700 a month via Outlook lettings agents

The rental hotspots along the new Elizabeth Line station have been revealed

The rental hotspots along the new Elizabeth Line station have been revealed

It is a similar story along the Elizabeth line for tenants as many look to balance their commute into London with where they can afford to rent.

Average rents in London have reached a new record of £2,195 a month, up 14 per cent compared to this time last year.

Southall has seen the biggest increase in the number of tenants contacting letting agents compared to ten years ago, more than quadrupling, up 372 per cent.

However, asking rents near Southall station are lower than nearby Hanwell or Ealing.

Asking rents have increased the most in western stations Slough, up 44 per cent, and Burnham, up 43 per cent, while those looking to rent near Custom House station face the most competition from other tenants.

Slough is among the asking rent hotspots along the new Elizabeth Line stations, with the average asking rent up 44 per cent during the past ten years

Slough is among the asking rent hotspots along the new Elizabeth Line stations, with the average asking rent up 44 per cent during the past ten years

One of the new stations built for the Elizabeth Line - Custom House - has seen competition increase 3270 per cent compared to ten years ago

One of the new stations built for the Elizabeth Line – Custom House – has seen competition increase 3270 per cent compared to ten years ago

Custom House, one of the new stations built for the Elizabeth Line and benefitting from significantly lower travel times into Central London, has seen competition increase by a staggering 33 times, up 3270 per cent compared to ten years ago.

Tim Bannister, of Rightmove, said: ‘As the Elizabeth Line opens, it does so with a backdrop of record rents in London, a rising cost of living and a shortage of available homes.

‘Areas further out from central London that have lower asking prices or rents, but are now more easily commutable will be attractive to new buyers and tenants in search of somewhere affordable to live near the capital.

‘Not only this, but new working from home patterns since the pandemic started two years ago will have many people weighing up whether they are prepared to commute from further away if they need to do so less often.’

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National Maternity Hospital decision is a welcome sign of the Government’s backbone

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The Government’s decision to proceed with the building of the new National Maternity Hospital is a welcome sign that the Taoiseach and his Ministers are willing to face up to the Opposition, the social media mob and assorted objectors on an issue of major national importance.

One of the weaknesses of the Coalition since it took office in June 2020 has been a tendency to run scared in the face of contrived outrage, usually fomented by a combination of Opposition politicians and vested interests, often mistakenly portrayed as representing public opinion.

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URW rolls out Westfield brand to three new destinations

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Unibail-Rodamco-Westfield (URW) unveiled plans to rebrand three flagship centres, rolling out the Westfield brand to Parquesur in Madrid, Taby Centrum in Stockholm, and Galeria Mokotow in Warsaw this fall. The rebranding continues the expansion of the Westfield brand in Europe as the company drives new revenues through media advertising and brand experiences, turning its huge footfall of 550 million visits across its European assets into a qualified audience, while also leveraging the Westfield brand’s significant value to retailers, who see over 20%2 higher sales at URW’s centres even when compared to other A-category malls.

 

The flagship destinations share a number of characteristics in addition to being among the most important retail centres in their respective markets: they are set in excellent locations with unrivalled transport options, have distinctive architectural and design features and a best-in-class approach in terms of customer experience, community engagement, and sustainability practices. To celebrate the launch of the Westfield brand at these assets, each destination will host festive consumer events which will be announced later this year.

 

Caroline Puechoultres, Chief Customer Officer of URW, said: “The rebranding of these centres continues our strategy to expand Westfield to Flagship European destinations in the wealthiest cities and catchment areas. The significant opportunity afforded to both retailers and brands by this increasingly digitally linked network of destinations is unparalleled – through Westfield our partners can reach tens of millions of European consumers, driving new possibilities in advertising, brand marketing and retail.”

 

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