Mortgage options for first-time buyers have shrunk since the start of March, as lenders pulled products from sale due to the impact of the war in Iran.
The choice of mortgage products for all customers has fallen by around 10% in the past two months, according to the latest data from Moneyfacts.
However, the number of deals for people with 10% or less deposits or equity – which first-time buyers are more likely to use – fell by 14%.
Mortgage rates rose during March, and the number of deals declined rapidly. While Moneyfacts data shows this rebounded somewhat during April as lenders began to cut rates and some mortgages returned to the market, higher loan-to-value options remained scarce.
Rachel Springall, finance expert at Moneyfacts, said: “Borrowers may be partly relieved by the lull after absolute mortgage chaos, but first-time buyers are bearing the brunt.
“Lenders slowly returned deals and switched to markdowns during April.
“Unfortunately, there is much more room for improvement, as overall product selection remains down around 10% since the start of March, with less than half of lost deals returning.
“First-time buyers will be disappointed to see their selection of higher loan-to-value (LTV) options down 14% since the beginning of March (90%, 95%, and 100% LTV).”
Springall explained how global pressures resulting from the conflict in the Middle East have completely reversed the expected path of inflation and set future interest rates, prompting lenders to withdraw deals and raise fixed interest rates.
As a result, first-time buyers or those with as little as 5% equity who are hoping for a two- or five-year fixed deal will find average fixed rates remain above 6%.
“It’s essential that new buyers in particular feel supported to keep the market moving, but affordability pressures are clear,” Springall added.
“Seeking advice from a broker is wise to keep up with the latest deals and get invaluable advice on affordability constraints,” she added.
