Competition for first-time buyers has intensified among banks and building societies. The average cost of a two-year fixed rate mortgage for those borrowing 95% of the property value has gone down by 0.02% compared to the previous month of November.

If buyers have a 10% deposit the typical rate has fallen even further dropping by 0.04% compared to the previous month of November according to Moneyfacts.co.uk.

In addition, the average mortgage rate for those with a 15% or 20% deposit have gone up month-on-month.

According to these latest figures first-time buyers or those looking for higher Loan to Value mortgages have benefitted the most over the last few months. Providers are competing for this share of the market and are driving down interest rates in a bid to attract customers. In addition, competition among banks and building societies tends to intensify during the last quarter of the year as lenders focus on meeting their end of year targets.

A reduction for people borrowing a larger proportion of their property’s value were more subdued following a warning from the Prudential Regulation Authority that the Bank of England was keeping a close eye on mortgage rates.

But lenders have now turned their attention to first-time buyers, with renewed competition in this area of the market leading to them slashing their rates.

During the summer months, competition was centred around people who had larger deposits, who represent a lower level of risk.

These rate reductions will save borrowers money on their monthly repayments and make it more likely to pass lenders’ affordability tests.

There are some very competitive rates available, so it’s pays to talk to a mortgage broker from The Mortgage Hub to get a full view of the market and the deals available. We can also look at your individual circumstances and find a deal that reflects your requirements now and in the future.