Low Deposit Mortgages Disappear
Mortgage deals for people offering a 10% deposit have almost evaporated from the market, according to new figures. Only 66 deals of this kind are still available, compared with 586 three months ago and 1,197 in February.
The figures, from Moneyfacts, reveal how the dramatic financial downturn has almost killed off traditional deals for those without large savings. Mortgage brokers say they will not return until house prices level off.
Deals for those with only a 5% deposit have already all but disappeared, and now the trend is being followed for deals requiring a 10% down payment.
First-time buyers are likely to be particularly affected by the falling number of low-deposit deals, at a time when homes are theoretically becoming more affordable for them. The Council of Mortgage Lenders recently said that a growing number of young people were having to approach family members for financial help to get on the property ladder.
Moneyfacts’ figures show that when house prices were at their peak a year ago, there were 1,152 mortgage deals available for those with a 10% deposit. Six months later, the number had fallen to 664, before slumping to 66 on 13 November.
The move follows a trend already witnessed in offers to those with just a 5% deposit. The number of these deals collapsed from 1,126 a year ago, to just 269 six months ago, and down to only 35 now.
For those able to offer bigger deposits, notably those with significant equity who are remortgaging, the picture is far less dramatic. Deals which specify a minimum 15% deposit increased from 198 a year ago to 228 now. There was only a slight drop over the same period in 20% deposit deals (from 216 to 189) and 25% deposit offers (from 449 to 421).
With the market shrinking rapidly, the higher-deposit deals are dominating the limited mortgage scene.
Banks currently have a limited amount of money to spend and funding they have previously gleaned from people remortgaging during a booming property market has dried up.
