Best first-time buyer mortgage rates fall below 4% – will more lenders start to offer better deals?
first time buyers They will now be able to get a mortgage below 4 percent.
Over the past few days, a handful of lenders have introduced 10 per cent deposit deals with rates as low as 3.96 per cent.
These are two-year fixed rates, with five-year fixes remaining more expensive.
While saving a deposit is still a struggle for many people, the number of first-time buyers is increasing as house prices remain stable or fall in many parts of the country.
Fall mortgage rates By making monthly payments more affordable, we can help more people get on the ladder.
The best buy rate at Lloyds Bank is 3.96 based on a two-year fixed 10 per cent deposit.
This marks a significant decrease since the beginning of December 2025, when the cheapest available rate was 4.16 percent. After the Bank of England cut the base interest rate on December 18, banks gradually reduced interest rates.
However, there is a vital warning; This opportunity is only open to those with a Club Lloyds bank account.
Cheaper deals: Mortgage rates for first-time buyers fall below 4%
This account has a monthly fee of £5, but this is waived if you pay £2,000 or more each month.
However, the mortgage deal comes with an arrangement fee of £1,199. Depending on your circumstances, a higher rate with a lower fee may be cheaper; especially if you plan to transfer the arrangement fee to the loan so that interest will accrue.
A couple buying a house worth £250,000 with a £2,500 deposit and taking out their mortgage for 30 years will pay £1,189 a month on a Lloyds deal.
Moneyfactscompare finance expert Rachel Springall said: ‘First-time buyers may feel it’s not the right time to get a mortgage if they’re struggling to put together a large deposit.
‘But as mortgage rates fall and various lenders relax stress tests, some buyers may be surprised to find they can now take their first steps on the property ladder.’
| lender | Ratio | Fee | Restrictions |
|---|---|---|---|
| Lloyds | 3.96% | £1,199 | Must have a Club Lloyds account |
| Furness B.S. | 3.97% | £749 | Valid only for those with zip codes LA, CA, PR and FY |
| Bank of Ireland | 3.99% | £1,495 | You need to go through a mortgage broker |
| HSBC | 4.01% | £249 | You must have an HSBC Premier Account |
| Virgin Money | 4.03% | £995 | None |
Bank of Ireland offers a rate of 3.99 per cent for the same terms, which comes with a higher fee of £1,495. This would cost the same couple £1,192 a month.
It will be open to customers in the Republic of Ireland as well as the UK, and buyers will need to apply through a mortgage broker to secure the deal. Many mortgage brokers are free to the buyer.
Mortgage broker L&C’s David Hollingworth said interest rates were currently “at the lowest levels seen since September 2022”. Budget fixed proportions of rockets were seen.
He added: ‘There may be further room for improvement if the Bank of England moves away from its current cautious approach on the pace of rate cuts.’
In addition, Furness Building Society offers mortgages for less than 4 per cent – but there’s still a catch.
It has a rate of 3.97 per cent and a fee of £749, but only applies to those within LA (Lancaster), CA (Carlisle), PR (Preston) and FY (Fylde) postcodes.
Better first-time buyer mortgage rates may soon emerge as lenders look to capitalize on increased activity among first-time buyers.
HSBC, Halifax and Yorkshire Building Society are among those offering mortgages with 90 per cent loan-to-value ratios hovering around 4 per cent.
The number of first-time buyers is expected to rise this year as house prices remain stable or fall in many areas across the country and sellers struggle to flip homes.
Less competition in the market means they can potentially buy a house at a cheaper price.
Research by TSB has found that more than nine in 10 first-time buyers negotiated the price of buying a property last year, getting an average discount of £22,900.
Some mortgage lenders have relaxed their rules to allow some first-time buyers to borrow more money than they could before.
Hollingworth added: ‘Lenders have become increasingly flexible about how much money first-time buyers can borrow as they ease the stress testing approach and higher multiple lending rules improve.
‘This, coupled with better rates and more options for those putting down small or no deposits, will help more first-time homebuyers make the transition to homeownership.’
In addition, reduced rent increases have opened up greater savings for some potential first-time homebuyers.
But overall, the age of first-time shoppers is still increasing.
Springall added: ‘According to UK Finance, the average first-time buyer mortgage term is 31 years, compared to 28 years a decade ago.
‘Choosing the right deal and term is up to the individual, so it is imperative that borrowers seek independent advice before committing.’
