From This is Money:
Figures from Moneyfacts.co.uk show that average two-year fixed mortgage rates for those only able to put down a 10% deposit currently sit at 6.12%.
This is a whole 4.25% above two-year swap rates, the rate at which lenders borrow fixed rate funding between themselves.
Cuts have seen the Bank of England base rate fall from 5% to 0.5% in the last twelve months, but had almost no impact on mortgages costs for those with limited funds.
Rates remain stubbornly high for loans taken on a small deposit, while those who can raise 25% or 40% are seeing bargain basement deals.
Steve Smith, senior consultant at mortgage broker Chartwell Funding said: ‘First-time buyers are being penalised for the mistakes made by the banks.’
‘They didn’t get us into this mess, but now they’re the ones paying because banks are unwilling to take risks on loans worth more than 75% of the property.’
‘Instead, what’s happening is that lenders are simply making more money out of those with limited funds by…
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