• Colmore Finance

First-time buyer mortgage rates continue to fall

Updated: Dec 7, 2021

First-time buyer mortgage rates fell this month, despite rates across the market as a whole rising month-on-month, new research shows.

The research, which is due to be published in the November Moneyfacts UK Mortgage Trends Treasury Report, found that the average rate on a two year mortgage deal requiring a 10% deposit fell from 2.56% to 2.54% between October and November. The average five year rate on deals with a 10% deposit fell from 3.05% to 3.02% during this same period.

Meanwhile, for those looking to buy a property with a 5% deposit, the average rate on a two year deal dropped from 3.32% in October to 3.22% in November. The average rate on a five year deal with a 5% deposit also fell, down from 3.63% to 3.51% during this same period.

Along with average first-time buyer rates falling month-on-month, buyers with a 10% deposit or less looking to lock into a two or five year fixed deal will find the market much more competitive compared to a year ago.

The average rate on a two year fixed deal requiring a 10% deposit has fallen by a substantial 1.22% year-on-year, down from 3.76% in November 2020 to 2.54% this month. The average rate on a five year deal needing a 10% deposit has also fallen sharply, down from 3.98% to 3.02% year-on-year.

Average rates on two and five year deals requiring a 5% deposit have also fallen year-on-year, down 0.05% and 0.09% respectively.

Mortgage rates start to rise

Although average rates on deals aimed at first-time buyers have fallen month-on-month, rates overall have risen. The average rates on two year fixed deals across the whole market have increased from 2.25% to 2.29% between October and November. The average five year fixed rates have also risen during this period, up from 2.55% to 2.59%.

The reason for the rise in average rates across the market could be due to lenders increasing rates on the most competitive deals, which usually require a deposit or equity in the property of 35% or more.

Indeed, the average rate on deals available to those with a 35% deposit or equity in their home increased from 2.11% to 2.50% on two year fixed deals and 2.32% to 2.70% on five year fixed deals between October and November.

For mortgage borrowers the era of record low mortgage rates could be coming to an end, and borrowers who have not yet locked into a fixed rate mortgage may want to consider locking into one soon. First-time buyers may also start to see that rate rises at the more competitive end of the market could result in deals requiring a 10% deposit or less starting to rise as well, especially if lenders become more risk-averse if the Bank of England increases base rate as expected by spring 2022.

“As the market remains unsettled, borrowers may consider this an opportune time to explore securing a new deal, as there is no guarantee that rates will not continue to increase in the months to come,” said Eleanor Williams, finance expert at “Seeking out independent financial advice to assess the changing market is vital to ensure the best possible deal can be secured considering the rate, associated fees and incentives.”

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