First-time buyers will pay premium rates on 95% mortgages

Homebuyers taking advantage of the Government's new 95% mortgage scheme could end up paying premium rates, experts have warned. The plans will allow buyers to secure properties worth up to £600,000 with just a 5% deposit. It was hoped that the Government's guarantee behind the loans would help to lower rates from what is currently being offered by risk-averse banks. But brokers have warned that lenders could continue to charge higher rates, leading to pricey monthly instalments. Mark Harris of SPF Private Clients, a mortgage broker, estimated that rates for a five-year fixed deal could be between 3.5% and 4%, while Martin Stewart of advice firm London Money said they could be even higher. The average quoted mortgage rate for a 95% mortgage was 4.07% in January 2021, according to the Bank of England.

The Daily Telegraph (08/03/2021)

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