The UK mortgage market has received a welcome boost this week as Leeds Building Society and Virgin Money both announce significant rate reductions, aiming to support first-time buyers and homeowners looking for better deals. But with rising property prices, high deposit requirements, and an unpredictable economy, is this enough to truly help struggling buyers onto the property ladder? In this article, I will run through the changes to first0-time buyer mortgages, UK property purchases in general, and the overall outlook for people looking to purchase their first home.
First-Time Buyer Mortgages UK: Leeds Building Society Introduces New FTB Mortgage with Cashback Bonus
Leeds Building Society has launched a new mortgage designed specifically for first-time buyers, offering a £1,000 cashback incentive to help cover moving costs or home furnishings. The five-year fixed rate deal is set at 4.75% at 85% loan-to-value (LTV), comes with no fees, and provides much-needed financial support to those taking their first steps into homeownership. Saving enough for a deposit is a challenge on it’s own! Many first-time buyers don’t realise or consider the potential extra costs that come with buying your first home. This incentive can really be a life saver.
First-Time Buyer Mortgage Rates
In addition, Leeds Building Society has reduced mortgage rates across various products, including its innovative Income Plus Mortgage, designed to allow FTBs to borrow up to £52,000 more on average through enhanced affordability assessments. Rate cuts include:
- Two-year fixed rate mortgage at 90% LTV (residential purchases and remortgages) lowered from 6.19% to 5.89% (fee-free).
- FTB Income Plus Mortgage five-year fixed at 85% LTV reduced from 4.74% to 4.64% (with a £999 fee).
- Shared Ownership five-year fixed up to 95% buyer share cut from 5.19% to 5.04% (£999 fee).
- Fee-free Shared Ownership five-year fixed up to 95% buyer share reduced from 5.39% to 5.27%, including £500 cashback on completion.
Virgin Money Cuts Mortgage Rates By Up to 0.68%
Virgin Money has also slashed rates across its mortgage portfolio, with some fixed-rate deals reduced by as much as 0.68%. Key changes include:
- 10-year fixed purchase mortgages reduced by up to 0.68%, now starting at 4.89%.
- Shared ownership fixed rates lowered by up to 0.15%, starting at 4.44%.
- Exclusive purchase range: Two- and five-year fixed rates for loans of £1m+ at 75% LTV reduced by 0.10%, now from 4.54%.
- Retrofit Boost five-year fixed rates reduced by 0.10%, now from 4.87%.
- Remortgage range: Two-year fixed rates cut by up to 0.10%, now from 4.43%, while five-year fixes start from 4.34%.
- Buy-to-let and product transfer ranges also saw reductions of up to 0.10%.
A Lifeline for First-Time Buyers?
While these rate cuts provide some relief, the reality for first-time buyers in the UK remains grim. Despite these reductions, mortgage affordability remains a massive hurdle, with many potential buyers still struggling to save for deposits while balancing high rents and soaring living costs.
House prices continue to outpace wage growth, and while lower mortgage rates are welcome, they don’t solve the underlying issue: homeownership is still out of reach for many young people. The introduction of higher borrowing limits through affordability improvements is promising, but it also raises questions about long-term financial sustainability for buyers taking on bigger loans.
What Does the Future Hold?
With the Bank of England holding interest rates steady but inflation concerns lingering, there’s no certainty that mortgage rates will continue to fall. If inflation remains sticky, further base rate hikes could follow, putting pressure on lenders to raise rates once again. First-time buyers should remain cautious, considering not just initial rates but long-term affordability.
Louis Mason, Marketing and Communications Director at Oportfolio Mortgages, commented on the changes: “Any movement in mortgage rates that benefits first-time buyers is a step in the right direction, but it’s not a silver bullet. While cashback offers and affordability tweaks are helpful, the core issue is that UK house prices remain stubbornly high. We need a multi-faceted approach, including government intervention, increased housing supply, and further innovation from lenders, to truly unlock homeownership for the next generation.”
Get First-Time Buyer Mortgage Advice
For anyone considering their options when buying their first home, speaking to a qualified first-time buyer mortgage expert is essential. Give our team of advisors at Oportfolio Mortgages a call today to speak with one of our experienced and knowledgeable mortgage advisors. We are here to help.
