New research commissioned by Woolwich reveals that the number of loans to first time buyers has fallen by 37 percent since 1999*, as they struggle to keep up with house prices which have risen by a staggering 90 per cent between 1998 and 2003.
Recognising the financial challenges first time buyers' face, Woolwich last month scrapped its higher lending charge and has now launched a suite of mortgages to help them get a foot on the property ladder. The range includes a three-year discount mortgage with a best buy rate of 5.29% and a two-year stepped tracker with 1.50% cashback.
This new suite of mortgages has been designed following consultations with first time buyers to determine what they want from their first mortgage. In addition to competitive rates, the findings have led Woolwich to offer successful applicants of the two-year stepped tracker mortgage a number of additional benefits:
- 1.50% cash back which will, in most cases, be equivalent to the cost of stamp duty - another major barrier to entry for first time buyers.;
- Through an alliance deal, first time buyers will qualify for discount vouchers worth up to 20% at Argos to purchase home and electrical goods;
Andy Gray, head of mortgages at Woolwich said: "First time buyers face particular problems in the UK, through a combination of high house prices, and stamp duty costs which can be the final financial straw. We have taken on board the views of consumers wanting to get their feet on the property ladder and developed a range of leading products in terms of price and benefits, in what is a very competitive marketplace."
The table below details the applicable rates for the new first time buyer mortgage:
Product Type Initial Interest Rate The Overall Cost for Comparison is Term or
End-Date Application Fee Eligibility ERC
3-year Discount - 1.50% off the Woolwich SVR - No Higher Lending Charge and £500 cashback 5.29%
6.6% APR 3 years £100 First time buyers only, Max LTV 95%
4% of the balance repaid plus £500 for 3 years
3-year Fixed Rate
- No Higher Lending Charge and £500 cashback 5.39%
6.7% APR 30.06.08 £100 First time buyers only, Max LTV 95%
3% of the balance repaid plus £500 until 30.06.08
3-year Discount - 1.50% off the Woolwich SVR
No Higher Lending Charge, with a free no disclosed valuation - see eligibility 5.29%
6.6% APR 3 years £100
(Refunded on completion) First time buyers only, max LTV 95%, Max property valuation £300,000
4% of the balance repaid plus £500 for 3 years
2-Year Stepped Tracker
Year 1, Barclays Bank Base Rate (BBBR) + 1.00%, then Year 2, BBBR + 1.25%, then BBBR + 0.85% for term
No Higher Lending Charge with 1.50% cashback - see eligibility 5.75% / 6.00%/ 5.60%
5.9% APR 2 years £100 First time buyers only, LTV over 75%, Max 95%. Max property valuation £250,000
1.50% of the balance repaid for 2 years.
Woolwich is already an award-winning provider with accolades in 2004 from Your Mortgage magazine for Best Direct Mortgage Lender and from Moneyfacts where they won the Best Current Account and Offset Mortgage provider.
Woolwich first time buyer mortgages are available through Barclays and Woolwich branches or via the telephone on 0845 607 1111.
