Low Deposit Mortgages
There are signs that the market is gaining confidence with mortgage deals for buyers with smaller deposits. At the time where economic recovery is still at stagnant rates having this kind of signal from the housing sector is very promising. In the future when the economy finally starts to grow at a more robust rate, house buyers will have an even more increased choice of mortgage deals with low deposits. Despite that, approval rates of new loans and house sales are still very weak. The appearance of 10% mortgage deals could mean that lenders are willing to lend to first time buyers for example, the type of house buyer that could benefit from such deals.
The Rise of 90% Mortgages Available
Just two years ago, with lack of confidence in the market, banks had available only 77 deals with a Loan to Value of 90%, according to moneyfacts.co.uk. At that time was easy to believe that this product was even disappearing. It was quickly understood that, without the segment of first time buyers, the housing market could not grow, inducing the sector in a vicious cycle: property don’t change hands, banks don’t lend, banks don’t profit from these kind of loans. There was in fact a change of attitude by what it looks like was a coordinated effort to boost the lending market. Banks have increased their product offer to include low deposit mortgages and at the start of this year they were 199. Now there are 244 mortgages available that require only a 10% deposit.
…and even 95%
Against what is commonly believed, there are still 95% mortgages available, however this comes at a price. With a high arrangement fee and a higher than average interest rate these low deposit mortgages are to be takes with caution and you should ask or professional advice before being tempted into taking one of them.
Signs of hope are coming from the mortgage industry. There are not available any 100% mortgage deals but the fact that there are an increasing number of low deposit mortgages for first time buyers for example, could mean better conditions in the future.