First Direct has recently announced significant cuts in its mortgage deal costs, particularly benefiting those with smaller deposits. This move is part of a wider trend in the mortgage industry, with several lenders adjusting their rates in response to the evolving market conditions.

Major Cuts for Small Deposits

First Direct has made a notable reduction in the cost of its fixed-rate mortgage deals. The most substantial decrease is a 0.45 percentage point cut, specifically aimed at borrowers who can only afford a 5% deposit, also known as 95% loan-to-value (LTV). This means if you’re buying a house and can only put down 5% of its value upfront, these new rates from First Direct could be particularly advantageous.

• Two-Year and Three-Year Fixed Rates: Previously set at 6.44%, these rates have now dropped to 5.99%. The best part? There’s no arrangement fee attached.
• Five-Year Fixed Rates: If you’re considering a longer-term deal, the five-year fixed rate has been reduced to 5.64%.

Better Deals for Larger Deposits

Those who can afford a larger deposit aren’t left out either. For borrowers with a 90% LTV, rates have been cut by up to 0.3 percentage points, starting from 5.09% for a five-year fixed deal.

Moreover, for those at the higher end of the market, with at least 40% equity or deposit, there’s a special five-year fixed rate deal at 4.64%, accompanied by a £490 fee.

Competitive Changes in Buy-to-Let Market

The buy-to-let sector is also seeing changes. Accord, part of the Yorkshire Building Society, has trimmed selected buy-to-let rates by up to 0.3 percentage points.

• Two-Year Fixed Rate: A new rate of 4.79% is now available for buy-to-let purchases at 60% LTV, down from 4.94%, with a fee of £3,495.
• Five-Year Term: For those looking to remortgage, a five-year term at 75% LTV is now offered at 4.99%, reduced from 5.19%, with a fee of £1,995.

Property Market Trends

Rightmove, the online property portal, has shared insights into the property market trends. They predict a 1% decrease in average asking prices for properties by the end of 2024, as the market stabilizes post-pandemic.

• Current Market Status: Compared to last year’s prediction of a 2% drop in 2023, asking prices are currently 1.3% lower year-on-year.
• Mortgage Rate Forecast: Rightmove anticipates that mortgage rates will stabilize in the New Year but remain higher than usual, which could affect buyers’ budgets.

In summary, First Direct’s rate cuts offer a significant opportunity for both first-time buyers and those looking to remortgage, especially those with smaller deposits. The broader mortgage market is adjusting to post-pandemic conditions, with lenders like Accord also revising their rates. While property prices are expected to decrease slightly, the higher mortgage rates may impact overall affordability for prospective buyers.