· Bigger fees, smaller discounts and higher rates for first time buyers thinking about buying a property, says mform.co.uk

Average fees on the top five first-time buyer mortgages have shot up by around 35% since this time last year, analysis from mform.co.uk* reveals.

First time buyers struggling to get together deposits of as much as £46,000** or 25% of the value of the property they want to buy, are also having to pay higher interest rates. Indeed, in March 2007, the average interest rate on the top five first-time-buyer mortgages was 5% as opposed to 5.8% in March of this year. mform.co.uk estimates*** that this means that the average first-time buyer will see their annual mortgage repayments increase by around 16% or £920.

This time last year first time buyers could expect to pay out around £637 in arrangement fees on a best buy mortgage, since then this figure has increased to £857.

The average discount available to first time buyers has also dropped from 2.12% March 2007 to just 1.57% a year later. All this is at a time when many lenders have increased the deposit required on their best value first-time-buyer mortgages up to 25 per cent.

While many of the big name lenders demand larger and larger deposits, mform.co.uk’s analysis revealed that the current best buys for first time buyers includes tracker deals from HSBC that offer up to 90% of the properties value and fixed rates from Yorkshire Building Society at up to 95%. Buyers looking for the security of longer term fixed rates will find a competitive 5 year fixed rate at 5.59% from Abbey which requires only a 20% deposit

Francis Ghiloni, mform.co.uk’s Marketing and Business Development Director, said: “These are tough times for first time buyers. Lenders are generally asking for larger deposits and with fees and interest rates on the up, borrowers will need to be sure about their ability to meet these commitments before taking a step on to the property ladder.

“Potential borrowers need to be careful now more than ever to take into account the impact of fees on their mortgage in order to make sure that they have a clear idea of the true cost of their mortgage.

“It is good to see Halifax launching deals for first-time buyers and emphasising its commitment to them. However even its deals involve better rates for those with bigger deposits.”

mform.co.uk offers a unique free service linking mortgage customers directly to the application systems of lenders. It is the only website which allows borrowers to search the whole market for the best products ranked on true cost and to apply directly to lenders.

The service is completely independent and is not influenced by commercial deals or advertisements. There are no distracting sponsored links and borrowers can also research mortgage product features and lenders’ service levels.

mform.co.uk works with lenders by enabling them to link with informed mortgage customers and by reducing lenders’ costs allows them to pass on savings to customers.

The service, which is free and easy to use, can be found at www.mform.co.uk.

Notes:

*mform.co.uk’s own analysis of best-buy first-time-buyer mortgages
** According to the land Registry, the average property in England and Wales was worth £186,045. 25% of this is £46,511.

*** This is based on the average size of a first-time-buyer mortgage of £115,000 – Council of Mortgage Lenders, January 2008

****Based on borrowers needing a 25% deposit on an average UK house at £115,000 (this is the average size of a first-time-buyer mortgage in January 2008 (Council of Mortgage Lenders)

For more information contact:
mform.co.uk: Francis Ghiloni/Gordon Swan 0131 556 4845

Citigate Dewe Rogerson: Kevan Reilly/Jonathan Henderson on 0207 638 9571

About mform.co.uk

mform.co.uk enables people to simplify the process of choosing a mortgage by identifying the best ones for them based on a range of criteria, including cost and product features such as the ability to make over-payments.

The free service enables consumers to source personalised all-round best buys rather than deals based on headline interest rates or led by sponsorship deals and advertisements. It provides information on the standard of service of lenders’ application processes and there are no sponsored links promoting mortgage products.

Jonathan Henderson
Citigate Dewe Rogerson
3 London Wall Buildings
London Wall
London EC2M 5SY

Switchboard: 0207 638 9571
Direct Line: 0207 282 1057
Direct Fax: 0207 282 1042
Email jonathan.henderson@citigatedr.co.uk

For more information see: www.citigatedewerogerson.com