First-time buyers love mortgage brokers
In our latest mortgage round-up, finance journalist Ruth Jackson looks at a spate of good news including low interest rates, rising completions and how brokers are helping first-time buyers.
March 14, 2019
The broader news this week has been fairly grim and Brexit orientated, but things are looking good in the world of mortgages. New surveys and stats are out showing why first-time buyers love mortgage brokers and that interest rates are half what they were 10 years ago.
Mortgage completions on the up
The number of first-time buyers completing on their mortgages has hit a three-year high.
Data from the Intermediary Mortgage Lenders Association (IMLA) shows that the rate of completions for first-time buyers handled by intermediaries – that’s mortgage brokers – hit 89% in the final quarter of 2018.
It shows that first-time buyers are increasingly turning to mortgage brokers to help them navigate the mortgage application process. The number has increased by 20 percentage points since 2016.
“IMLA predicts that mortgage intermediaries will account for a growing share of the mortgage market this year and into 2020,” says Kate Davies, executive director of IMLA.
“These figures underline our firm belief that, during times of uncertainty, people still seek out a seasoned expert to help guide them through complex financial decisions.”
If you are preparing for a mortgage application read why you should consider using a mortgage broker.
First-time buyers love brokers
Four out of five first-time buyers say that using a mortgage broker was helpful. Its perhaps unsurprising given the stat above showing how intermediaries helped first-time buyers complete on their mortgages.
The survey by Comparethemarket found that 80% of first-time buyers found using a mortgage broker ‘added value’.
“For first-time buyers looking into options such as Help to Buy and the many alternatives there are so many options that it is crucial, they speak to a broker to get the best deal,” says Andrew Montlake, director of Coreco.
The survey also looked at what home buyers regretted about their house purchase. It found that 15% wished they’d haggled more on the price. Meanwhile 10% regretted using all their savings as a deposit leaving them with no emergency fund or money to spend on the property.
More than a quarter of people felt they had paid too much for brokers, solicitors, surveyors and estate agents. Read our guide to find out more about the hidden costs of buying a property.
“People with no prior experience in purchasing a property may not be aware which services and products offered to them on the home buying journey are mandatory and which are discretionary, and importantly, whether they are good value or uncompetitive,” says Comparethemarket.
If you want to learn more about the home buying journey read our step-by-step guide to buying.
Mortgage rates halved
Interest rates on mortgage are half what they were during the financial crisis. The Moneyfacts UK Mortgage Trends Treasury Report has analysed rates since the Bank of England last cut interest rates in March 2009.
The results are great news for borrowers. Since 2009 the average two-year fixed mortgage rate has fallen from 4.79% to 2.49%. The average five-year mortgage rate has fallen by 2.73% and the average two-year tracker is down by 1.78%.
That is just the average rates, best buys are far lower.
There is also far more competition in the market. The number of 95%LTV mortgages has soared from 3 to 391.
“It would have been difficult to predict 10 years ago that we would ever see mortgage rates at historic lows and product numbers at record highs, with providers now vying to compete for new business across most LTV tiers,” says Darren Cook, finance expert at Moneyfacts.
“During the past 10 years, not only have the two and five-year fixed mortgage rates dropped, but the gap between the two has more than halved. This could be a significant factor for borrowers considering whether to fix for the short or longer-term, especially with the current economic uncertainty.”
Today’s best mortgage deals
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