First-time buyers already have to collect together an average 25 per cent deposit, equating to £46,000 on a loan of £115,000 (the average size of a first-time buyer mortgage according to the Council of Mortgage Lenders), and pay much higher interest rates, but associated fees have also been rising at a rapid pace.
“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," advised Francis Ghiloni, mform.co.uk’s marketing and business development director.
At the end of the first quarter of 2007, first-timers were looking at arrangement fees of around £637 on a best-buy mortgage, however these have now risen to £857.
The average discount available to first-time buyers has also dropped by just over half a percentage point to 1.57 per cent.
Furthermore, mform.co.uk found that the average interest rate on the top five first-time-buyer mortgages was 5 per cent in March 2007 compared with 5.8 per cent in March of this year - leading to an increase of around £920 in annual repayments.
Ghiloni continued: “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.
“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.”
