Sharp fall in low deposit mortgages
November 29, 2008
According to recent reports there has been a sharp fall in the number of low deposit mortgages that are available on the market, making the situation increasingly difficult for first time buyers who want to get onto the property ladder but have very little in the way of savings and no previous property from which to take equity. Most lenders have increased their deposit requirements significantly over the past year since the onset of the global credit crunch.
Over the past year 125% and 100% mortgages have disappeared off the shelves, as lenders rein on their lending procedures, and this has made things hard for first time buyers. More recently lenders have been getting rid of 95% mortgages, making it more difficult for those looking to pay the traditional 5% deposit. And this most recent report suggests that there are hardly any deals now available for those able to put down a 10% deposit, which means that those looking to get a competitive mortgage will have to find a sizeable deposit.
The changes in deposit requirements are likely to hit hardest when it comes to first time buyers, as this is the group that traditionally has little or no deposit to put down on a property. House prices have been falling month on month for the past year, making property more affordable for this struggling group, but the changes in deposit requirements have resulted in yet another hurdle for this age group.
A year ago there were fewer than two hundred mortgage deals that required a minimum deposit of at least 15% of the property value, but this has now increased to nearly 230 deals now according to the report. Officials have said that high deposit mortgage deals are becoming the norm amongst many lenders, and this is one of the reasons why property sales have slumped, as many are unable to afford these higher deposits.
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- Sharp rise in mortgage fees According to a recent report there has been a sharp rise in the cost of mortgage related fees over the past year, making affordability for potential buyers even more difficult. The rocketing fees are likely
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- First time buyers paying more for mortgages due to deposit levels A recent report has shown that those taking out mortgages with just a small deposit to put down are paying far more each year for a mortgage than those that have a higher deposit level
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