Mixed news for those with low deposits for mortgages
December 18, 2009
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 95 percent loan to value mortgages, 100 percent mortgages, and even 125 percent mortgages.
However, since the onset of the global credit crunch two years ago this has all changes, and the mortgage market has become extremely restricted particularly for those that have only a small deposit.
However, there has recently been some mixed news for those with smaller deposits. According to reports the choice of mortgages that are available to those that have smaller deposits is set to grow, which means that consumers that do not have huge deposits will have a greater range of mortgages to choose from with a variety of lenders.
However, whilst this is good news there is also some bad news, with reports claiming that the cost of getting a mortgage will still be high for those that do not have a large deposit.
A number of lenders such as the Cheltenham & Gloucester and the Saffron Building Society have launched mortgage deals for those with a minimum deposit of 10 percent, which in the current climate is classed as a relatively low deposit.
However, the costs can work out quite high, with mortgage rates on these fixed rate deals ranging between 5.89 and 6.99 percent. Given that the base interest rate is just 0.5 percent these mortgage rates are very high compared to what is on offer to those with higher deposit levels.
David Black from Defaqto said that he hoped that more and more lenders would start offering increasingly affordable deals for those with lower deposits, stating: ‘Hopefully, there will now be a domino effect, with other lenders launching more competitive rates for those with only a small deposit at their disposal. Lending volumes remain low, so things are still tough out there for borrowers. And rates are much higher for those with little equity.’
- Mixed news for first time buyers Whilst first time buyers have experienced extreme difficulties over the past couple of years when it comes to being able to get onto the property ladder a number of changes have taken place over recent
- 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
- Mortgage lenders attempt to cut costs There has been evidence that competition in the mortgage market is hotting up again, with lenders striving to increase their share in the mortgage market by trying to cut costs for potential buyers. Many lenders are
- 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
- Mixed reactions on housing proposals from government The government in the UK has made a number of new proposals recently to try and kick start the slow housing market, and amongst the actions taken by the government are a suspension in stamp
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