Thu, 13 Apr 06
Financially challenged first-time buyers have been turning to cash-back mortgages to help with getting on that all-important first rung of the ladder.
Mortgages Direct’s monthly survey reveals that cash back mortgages soared by over 200% in March, with 11% of borrowers opting for these mortgages compared to only 3% in February.
This is the highest level since the survey began. As first-time buyers continue to return to the market with levels rising to 47% of its borrowers in March from 35% in April last year, more borrowers are stretching themselves financially and an increasing number are opting for cash back mortgages.
Peter Gladdy, director of Mortgages Direct commented: "First time buyers are returning to the market as confidence is budding over the spring period."
"However these buyers are still struggling to get on the property ladder and are financially stretched to the limit. Cash back mortgages are winning them over as they see the immediate benefit of receiving cash on completion to help finance vital purchases, such as basic furniture or to even recuperate the amount invested in legal fees etc."
The index also reveals that demand for two year fixed rate mortgages continues to rise with 68% of borrowers opting for a two year fixed rate mortgage from 64% in February.
Peter Gladdy said, "The increase in borrowers opting for two year fixed rate mortgages indicates that borrowers are now incredibly rate sensitive. They are opting for the lowest deal available and two year fixed rates have been among the most competitive."
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