First-time buyers with low deposits suffer high interest rates

Date:Wednesday 14th January 2009
Author: Max Freedman

Interest rates on mortgages for first-time buyers can now be significantly more than for existing borrowers.

According to a report in the Financial Times, first-time buyers now may have to pay 15 times more interest on their mortgages than those on cheap tracker products taken out a year or more ago.

The newspaper reported that a lack of funding had led to mortgage lenders raising their rates further over the base rate.

Jonathan Cornell of Hamptons International Mortgages told the paper: "The low rates offered in 2007 were a function of the massive competition among lenders at that time."

The Mirror reports the case of one family facing repossession after their rates increased.

Marvin Williamson and Lisa McNally, who have four children including a newborn baby, hit trouble when work dried up for Mr Williamson, who is a carpenter.

Their five-year, fixed-rate deal from Abbey ended and monthly payments increased.

Having now missed five payments, they have been given a repossession order and could lose their home if they miss another.