First-time buyers pay £140 more per month in mortgage repayments since beginning of the coronavirus crisis
First-time buyers taking out a mortgage have seen monthly repayments rise by up to £140 during the coronavirus crisis, after nervous lenders hiked rates to a five-year high.
Bank of England data shows the average rate on a two-year fixed mortgage for someone with a 10 per cent deposit has risen from 1.97 per cent in February to 3.32 per cent last month – the highest level since June 2015.
Finance information firm Moneyfacts said this has pushed up the monthly repayment on a £200,000, 25-year mortgage from £845 to £982 – a rise of £137.
Rate hikes: Data from the Bank of England revealed the cost of mortgages for first time buyers and those with smaller deposits has soared
Rates on two-year fixed mortgages for those with a 5 per cent deposit jumped from 2.74 per cent to 3.95p over the same period, pushing up repayments by £100 a month.
In contrast the average rate on a two-year fixed deal for someone with a 25 per cent deposit or equity had edged up from 1.4 per cent to 1.74 per cent.
The figures come a day after Boris Johnson pledged more support for first-time buyers.
Although the Bank of England has slashed interest rates to a record low of 0.1 per cent to boost the economy, borrowers with smaller deposits are being treated with caution.
There are growing concerns that house prices, which have staged a dramatic comeback as the lockdown has lifted, could fall when the furlough scheme closes at the end of the month.
Economists fear a surge in unemployment could cause the market to slam into reverse, pushing many home buyers with smaller deposits into negative equity.
Eleanor Williams from Moneyfacts said: ‘The increase may be seen as a further blow to would-be first-time buyers, at a time when increasing their level of deposit may already seem impossible due to rising prices and low savings rates.’