A 15% deposit may become the minimum for property purchasers
March 30, 2009
As a result of sweeping reforms being considered by the UK’s financial regulator, the Financial Services Authority, consumers that are looking to purchase a property in the UK may be forced to put down a minimum deposit of at least 15 percent when taking out a mortgage.
In the past, before the credit crunch hit, many buyers could get a mortgage without any deposit, and some were able to borrow 125 percent of the property value. The traditional level of deposit that lenders asked for was just 5 percent.
However, since the global credit crunch took a hold banks have been demanding higher deposits for their competitive mortgage deals, with some asking for 25 percent or even 40 percent of the property value, driving many first time buyers and lower income families out of the market altogether.
Lord Turner, the Chairman of the FSA, has recently indicated that he is considering banning mortgage loans for close to the full value of the property, which means that 5 percent and even 10 percent deposit mortgages may disappear altogether.
Turner said that in the past banks had not been regulated tightly enough, and that irresponsible lending had resulted in the financial meltdown that we see today.
He said that he intended to crackdown on the banking industry, and whilst his intention is to stop this sort of situation from happening again, this could also have an adverse effect on consumers, ranging from higher banking costs and borrowing fees to an increase in the number of people being driven out of the market when it comes to buying a home due to impossible deposit demands.
- Sharp fall in low deposit mortgages 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
- Deposit level drop from Abbey Earlier this month the High Street banking giant which has recently enjoyed taking a larger share of the mortgage market, Abbey, announced that it was cutting its deposit levels for access to its most competitive
- More bad news for those with low deposits Over recent months an increasing number of lenders have been demanding larger deposits from borrowers looking for mortgages, and this has resulted in many first time buyers and low income buyers being squeezed out of
- Mixed news for those with low deposits for mortgages In the past getting an affordable mortgage with only a low deposit of 5 percent, or even with no deposits at all in some cases, was not a big problem, as many mortgage lenders offering
- Mortgage lenders try and boost markets by cutting costs According to a recent report a number of mortgage lenders have recently been trying to boost the mortgage markets by cutting costs for those looking to purchase a property. Over the past couple of years consumers
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