First-time buyers get bespoke mortgage products

First-time buyers eager to get on the property ladder will be glad to hear that two new mortgages specifically designed for them have been launched by Yorkshire Building Society.

Offering a three-year fixed rate deal at 5.84 per cent and a five-year fixed-rate arrangement at 5.99 per cent, the new products can be obtained at up to 85 per cent loan-to-value (LTV).

In a bid to make the mortgages even more enticing for first-time buyers, the lender is offering free valuation and legal fees, as well as £500 cashback and no upfront charges.

According to Yorkshire BS, those opting for the mortgage stand to save around £1,800 over the term of the three-year product compared to current average 85 per cent LTV rates, with first-time buyers taking out the five-year loan likely to save around £2,800.

Commenting on the new products, Iain Cornish, chief executive at the society, explained that the fee-free mortgages are likely to "prove very attractive" to those eager to get on the property ladder.

"These mortgages are available from all our branches, where our fully-qualified mortgage advisers can guide and support first-time homeowners through the house buying process," he said.

"We hope that these new mortgages will take some of the financial pressure off first-time buyers as they have no fees to pay when they take out the mortgage and we provide £500 cashback when they complete, which should come in very handy whether it be put towards stamp duty, removal costs or kitting out a new home."

The launch comes in the wake of revelations by financial services organisation Moneyfacts.co.uk that an increasing number of major players in the mortgage market continue to slash fixed-rate deals.

As a result of the cuts, the average two-year fixed mortgage rate tumbled below five per cent for the first time since June 2009 last week, only to fall further to 4.86 per cent this week.

In the last week alone, Abbey, Accord Mortgages, Alliance & Leicester and Cheltenham & Gloucester slashed their rates by between 0.20 per cent and 0.40 per cent, Moneyfacts.co.uk revealed.

Leeds Building Society, first direct, the Post Office, Scottish Widows Bank and Yorkshire Building Society also cut some of their rates by between 0.05 per cent and 1.30 per cent during the same period, contributing to the biggest weekly fall since the beginning of the year.

According to Michelle Slade, spokesperson for Moneyfacts.co.uk, lenders "finally appear to be putting the 'open for business' sign back in the window and bringing competition back to the mortgage market".

"The number of two-year fixed deals paying below 4.00 per cent has increased by from 53 to 94 in the last two months and now accounts for a quarter of all two-year fixed deals on the market," she explained.

"Borrowers will be hoping that the early Christmas present they have received from lenders will continue into 2010."