Figures just out show that mortgage lenders have started to relax slightly the requirements they need for granting a home loan. This will, at long last, take some of the pressure off those struggling to raise a large deposit. 

Two-thirds of mortgage deals still require borrowers to put down a deposit of at least 25%. But figures from the financial information service Moneyfacts show a recent rise in the number of deals demanding smaller down-payments.  

The total number of mortgage deals has risen by 7% in the past month, with more needing only a 15% or 20% deposit.  

A number of mortgage providers are slowly reducing their strict criteria and are increasing the number of products available to those that can raise a 15% deposit, although at a higher initial interest rate. 

As lenders find the pool of customers who can put down a 40% deposit is shrinking, they are being forced to ask for smaller deposits. 

A year ago, with the contraction of the property market gathering pace, more than half the available mortgages still needed a deposit of only 10%, or even less.  

But last autumn, mortgage rationing by the UK’s banks and building societies became much more aggressive. By the end of the year the once-traditional 10% deals were rare and there are now just 96 of them.  

And by last December more than half of all home loans needed at least a 25% deposit. However, this year has seen some relaxation by the lenders.  

What we have seen over the past few months is a change in lenders offering their best interest rates at 70-75% loan-to-value rather than 60%. The number of deals needing a 15% deposit has risen, from 209 at the start of last December to 272 now.  

And the number of 20% deposit loans which are available has gone up from 105 to 143 in the past month.  

Banks consider a 75% loan to value as a conservative benchmark since it is generally where they see themselves getting their money back if a property is repossessed. With more mortgages becoming available at higher loan-to-values it looks like the banks are regaining some confidence within the housing market. 

News from the rental market recently has shown that the buy-to-let property market is still in the depths of the downturn, despite the upturn in figures in other areas of the property market. 

The National Landlords Association (a friendly sounding group), has claimed that UK housing tenants are more in debt than at any time since the late 1980s. Hundreds of thousands are falling behind with rental payments, largely due to rising unemployment. 

The association has described the situation as “pretty dire,” with at least a third of its member’s owed money. In the past year, the association has taken more than 20,000 calls from landlords worried about rent arrears.  One landlord mentioned in the report is owed nearly £9,000 in rent on her property in north London, after both her tenants lost their jobs. She claims that the intense stress is causing her health problems. 

Thankfully, the association did point out that tenants are also coming under severe strain.  

One tenant related how she fell behind with her rent after failing to find a job. She said the process of being evicted from her flat was extremely stressful and came on top of a series of similarly unpleasant situations.  

Apart from rising unemployment, apparently another issue is that housing benefit is now paid directly to tenants. Many landlords used to receive the payments themselves. The new policy, designed at empowering tenants has in many cases done so, however, it has also provided a temptation too big to resist for others who spend the rent money. 

Another issue is that there can also be a delay of up to two months before housing benefit comes through. This is a result of the current rules regarding housing benefit which have attempted to find the line between providing help to those in need and safeguarding the public purse. 

The housing charity Shelter has said that the government should now offer support to tenants in the same way it has given help to debt-laden homeowners. They said, “The government needs to look to see how the payment of housing benefit can be speeded up. Otherwise more tenants are likely to become homeless.”  

Landlords are also being urged to be sympathetic to the plight of tenants who lose their jobs, and cannot pay their rent as a result. The charity Crisis has urged The Landlords Association members to talk to their tenants and give them ‘breathing space.’  

It is unknown to what extent these appeals will be heard though, with unemployment expected to rise further over the coming months, most expect rental arrears to go up too, with observers saying this will inevitably also lead to more evictions as well.