First-time buyers are encountering increased financial pressure from rising mortgage rates and deposit requirements, according to analysis from financial data company Moneyfacts. The average new mortgage rate now stands at 5.59%, an increase from 5.47% at the start of July and 4.90% in March.
Moneyfacts reports that buyers with low deposits are now being charged more than 6% on their mortgages. Major lenders, including Santander and HSBC, have increased both fixed and tracker rate deals, following similar moves by Lloyds Bank last week.
Rachel Springall, Finance Expert at Moneyfacts, stated that interest rates are expected to remain higher for longer. She noted that first-time buyers able to save a 10% deposit would have more purchasing power and access to cheaper mortgage rates, but added that some borrowers may struggle to save even a 5% deposit due to a lack of affordable housing.