Low deposit mortgages virtually withdrawn by lenders

Posted under General by Jermaine

It was expected that a sharp decline in house prices would benefit first time buyers in fulfilling their dreams, but withdrawal of low-deposit mortgages by lenders has made it almost impossible for them to get on to the ownership ladder.

Moneyfacts’ data shows that borrowers are currently offered only 35 deals with 5% deposit and 66 deals with 10% deposit as against 1,126 deals which required 5% deposit or more a year ago.

Borrowers with inadequate savings are straight away rejected by the lenders, fearing risk of non-payment. A large number of first-time-buyers are required to wait for raising their own savings with parents’ and friends’ help to meet lenders’ demand of higher deposits, as reported by the Council of Mortgage Lenders.

Those with capacity to pay higher deposits or with significant equity are in a better position to get a remortgage deal. The number of deals which specified a minimum 15% deposit has gone up to 228 from 198 a year before while those requiring 20% deposit has come down to 189 from 216.

Lenders are specifying a minimum 25% deposit for the reintroduced tracker mortgage deals, making them unaffordable for the vast majority of first-time-buyers.

However, Tracker deals are surely the best option for borrowers in the present circumstances.

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