Mortgage rates for first time buyers with small deposits have reached a record low despite rise in base interest rates.

The latest Moneyfacts UK Mortgage Trends Treasury Report shows average mortgage rates for first time buyers have reduced 0.09% to 3.54% a record low.

For smaller deposits with 95% loan to value (LTV) first time buyer mortgages can be expensive, yet rates have fallen despite the Bank of England raising base rates by half-a-percent to 0.75%.

Over the last decade the rates for a 95% loan to value has decreased significantly from 6.52% in December 2008 reducing monthly repayment costs to homeowners.

More mortgage deals for buyers

First time buyers with a 5% deposit have more mortgage deals to choose from with only 17 in December 2008 and rising significantly to 304 today.

The following table from Moneyfacts shows the interest rates for a two-year fixed rate mortgage at 95% loan to value and the number of mortgage deals on offer.

Date	95% LTV	Number of deals
Dec-18	3.54%	304
Nov-18	3.63%	299
Dec-17	4.15%	217
Dec-08	6.52%	17

Darren Cook finance expert at Moneyfacts said, with first time buyers being the lifeblood of the housing and mortgage market.

It is encouraging to see that potential new homeowners now have a greater number of mortgages available at the higher LTV tiers as well as lower initial interest rates, says Mr Cook.

For existing owners with equity in their property, remortgage buyers or home movers can secure about 2.50% for a two-year fixed rate or about 1.90% for a two-year tracker deal.

There is higher activity with equity release buyers accessing wealth in their property using a lifetime mortgage, as average rates have reduced by three-quarters of a percent over two years to 5.22% in July 2018.

Larger deposit for lower rates

If you can stretch to a 10% deposit the mortgage rates reduce with a 90% loan to value two-year fixed rate averaging 2.70%.

For remortgage buyers currently on their lenders standard variable rate, switching to a new mortgage deal would help them to reduce the cost of monthly repayments.

The following table from Moneyfacts shows the interest rates for a two-year fixed rate mortgage at 90% loan to value and the number of mortgage deals on offer.

Date	90% LTV	Number of deals
Dec-18	2.70%	656
Nov-18	2.71%	650
Dec-17	2.68%	555
Dec-08	6.53%	102

Rates reduced slightly from 2.71% last month and have decreased from 6.53% in December 2008 making the repayments much lower.

Lower mortgage rates benefit buy-to-let investors as they can remortgage to reduce the cost of interest repayments to lenders.

After the financial crisis lending to borrowers with smaller deposits was non-existent and with a 10% deposit the number of mortgage deals has increased from 102 a decade ago to 656.

With a larger deposit the risk to the lender decreases and more are willing to operate in this sector increasing competition and lowering rates.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or a buy-to-let investor.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home and garden improvements or even buy a more expensive home.

Learn more by using the property value tracker chart, mortgage costs calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.