cheapest ever mortgage rates: Following feedback from its customers, Today (14 January), Barclays will introduce a mortgage to help boost the first-time buyer market this year, giving new buyers access to affordable mortgages with just a 5% deposit.
cheapest ever mortgage rates: Elsewhere, mortgage rates will be slashed by up to 1%, giving homeowners access to the cheapest mortgage deals Barclays has ever offered. Barclays is committed to continuing to help first-time buyers get on the property ladder – despite lending to first-time buyers being at the highest point since 2008, it’s still way off the peaks of 2007* (308,400 in 2007 compared with 175,700 in 2012), with the biggest hurdle being the size of the deposit and the monthly mortgage payments.
The new Family Springboard mortgage, launching next week, will help combat these issues and comes in 2 parts: It provides first-time buyers with a competitive 3-year fixed rate available with a 5% deposit at 4.69%, while the applicant’s family opens a savings account linked to the mortgage into which they put 10% of the purchase price. When the 3-year fixed rate period ends*, the savings are returned to the family. In terms of the cheapest deals Barclays has ever offered, there will be a 3-year fixed rate deal for those with a 30% deposit, which sees the largest cut of 1% to 2.89%.
The 2- and 5-year fixed rates Barclays will be offering are priced at 2.39% and 3.39%, for those with a 40 and 30% deposit respectively. Key reductions are also being made on the Great Escape remortgage package for those borrowers whose monthly payments were hit by competitors increasing their Standard Variable Rate (SVR) last year. They can remortgage onto the cheapest ever 2-year fixed rate deal, where the rate has been cut from 3.49% to 2.99%. Andy Gray, managing director of mortgages for Barclays, said: ‘This is a real boost for UK homebuyers with small or large deposits because we are giving them access to the cheapest ever deals we’ve been able to offer, brought about by the combination of the low base rate and funding for lending scheme. We’ve listened to our customers and need to continue to drive confidence in the housing market. The new family scheme and today’s slashed rates will encourage people to think about buying or moving home, which in turn, will help the economy move forward. For existing homeowners, this is extra good news because they can still look to reduce their monthly outgoings by switching to cheaper rates.' For Family Springboard, a first-time buyer purchasing a home at £160,000 would need to save a 5% deposit (£8,000) and require a mortgage of £152,000, while the family will be required to put £16,000 into a Helpful Start savings account. The mortgage repayments would be £861.34 a month at 4.69% for 3 years (based on a 25-year repayment mortgage). *CML data – measures the number of new loans given to first-time buyers up to Q3 each year, dating back to 2007. About Family Springboard:
- *The interest rate families will receive for depositing 10% of their savings into a Helpful Start Account will be base +1.50% gross AER. The savings will be returned with interest after the 3 years provided the mortgage payments are kept up to date.
Other schemes available to help first time buyers:
- Family Affordability Plan – allows parents to help their children get on or move up the property ladder without being on the property deeds. Both incomes are used to calculate the mortgage amount and the scheme is available across all mortgage rates, including NewBuy
- NewBuy – government initiative launched in March 2012 providing mortgages up to 95% loan to value on new build properties
About Great Escape:
- All ‘Great Escape' deals are aimed at borrowers who worry it would cost them too much to move to better rates elsewhere. They come with no application fee, free legal work and valuation and £300 cashback to cover the cost of a borrower's exit fee for leaving their present lender. The deals available under Great Escape go up to 80% LTV