Image of Rhiannon Philps

Rhiannon Philps

Content Writer
Published: 09/05/2024
man handing keys to new homeowner

As mortgage affordability continues to be a major challenge, building societies are offering different measures to help first-time buyers get on the property ladder.


Mortgage rates have been edging higher in recent weeks, making it even more difficult for first-time buyers to achieve their dreams of homeownership.

In this challenging market, building societies have been launching specialist products and schemes designed to help first-time buyers, as well as offering competitive rates when compared to other providers.

“Building societies offer competitive packages for first-time buyers and continue to support those who are the life blood of the mortgage market,” commented Rachel Springall, Finance Expert at

“Mutuals which offer two- or five-year fixed rate deals available to first-time buyers with a 5% or 10% deposit currently charge less on average compared to the market average in the same space,” she continued.

What is a building society?

A building society, sometimes known as a “mutual”, is a financial organisation that is owned and run by its members. They can offer many of the same products and services as traditional banks and operate under the same regulations.

How do their rates compare?

For first-time buyers with a 10% deposit, the average rate offered by building societies on two- and five-year fixed mortgages was 5.76% and 5.18% respectively at the start of May.

By contrast, the average rates for these products across all lenders was significantly higher at 6.20% (two-year) and 5.67% (five-year).

And, for first-time buyers with a 5% deposit, the average rate on two- and five-year fixed deals from building societies stood at 6.03% and 5.47% respectively, compared to the average of 6.15% and 5.66% across all lenders.

However, it’s worth noting that the average fixed mortgage rates from the seven biggest high street banks were even lower than the building societies’ average.


Moneyfacts mortgage market analysis of deals available to first-time-buyers
Average fixed rates All lenders Building societies High street banks*
Average two-year fixed rate at 90% LTV 6.20% 5.76% 5.48%
Average five-year fixed rate at 90% LTV 5.67% 5.18% 4.98%
Average two-year fixed rate at 95% LTV 6.15% 6.03% 5.87%
Average five-year fixed rate at 95% LTV 5.66% 5.47%


Data correct as of 2 May 2024. Deals shown are available to first-time buyers, but not exclusive to them. Deals exclude adverse credit options.

*Barclays, Halifax, HSBC, Lloyds Bank, NatWest, RBS and Santander. NatWest includes deals through its intermediary arm.


But even though rates are an important factor when choosing a mortgage, prospective borrowers should also consider other features such as product fees and any extra perks deals may offer.

“High street banks traditionally have more margin to price their mortgages lower, but the lowest rate deal may not be the best choice when all the costs and incentives associated with the mortgage are included,” explained Springall.

“Saving money on the upfront cost of a mortgage is incredibly important for first-time buyers who may have exhausted their cash on a deposit, legal fees and moving costs,” she added.

Specialist schemes

Competitively priced deals aren’t the only ways that building societies have been trying to support first-time buyers.

“Mutuals have made various efforts to be innovative, such as the Track Record Mortgage from Skipton Building Society, the £5,000 deposit mortgage from Yorkshire Building Society and the partnership between Leeds Building Society and Experian to potentially help consumers to boost their credit score,” identified Springall.

Skipton Building Society’s Track Record Mortgage looks at an applicant’s record of paying rent over a 12 month-period as part of its decision-making process and, notably, doesn’t require applicants to put forward a deposit.

Meanwhile, the £5,000 deposit mortgage initiative from Yorkshire Building Society allows first-time buyers to apply for a mortgage with a deposit of just £5,000, instead of needing to wait for years to save up a substantial deposit.

These schemes are likely to be attractive for first-time buyers, particularly single applicants and those who can’t rely on their family for financial help, as the Building Societies Association (BSA) noted that saving up a sufficient deposit was one of the major barriers to owning a home.

However, with these types of low-deposit products, you need to consider the risk that you could end up in negative equity (when you owe more on your mortgage than the value of your property) if house prices fall.

Elsewhere, Leeds Building Society uses Experian Boost as part of its mortgage checks. Experian Boost allows you to share your record of making regular payments, such as council tax and subscriptions, with the provider, which could help to boost your credit score.

These kinds of payments don’t usually make a difference to your credit history which can put some groups, particularly younger borrowers who haven’t been able to build up a good credit score, at a disadvantage when applying for a mortgage.

As a result, by using Experian Boost as part of its checks, Leeds Building Society aims to help first-time buyers with a history of making regular payments on-time improve their chances of getting a mortgage.

With such a wide range of mortgage deals available from different providers, it may be useful for first-time buyers to seek professional advice to help them find the right deal for their situation.

Compare first-time buyer mortgages

If you're just starting out on your home-buying journey, you can compare first-time buyer mortgage deals on our charts. There are two-year and five-year options with maximum loan-to-values (LTV) of 90% and 95%, for example.


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