Since the onset of the global credit crunch borrowing costs for those looking for a mortgage have increased dramatically in terms of interest rates, arrangement fees, and deposit levels. Those looking to take out a mortgage spend time shopping around for the most competitive rate, and there are some competitive deals still available. However, industry officials have said that the deposit level that is now required in order to secure one of the best buy mortgages has rocketed.

Officials have said that the average buyer looking to take out a best buy mortgage in the current market needs to find a deposit of close to £40,000. The average level of deposit required for a best buy mortgage is said to have soared to £37,119. This is going to make the situation even more difficult for many would be buyers, and in particular the average first time buyer, who has no previous property from which to take equity in order to raise this sort of deposit.

Officials are concerned that whilst property prices in the UK have been falling for the last ten months, and the average house price is now said to have suffered a 10% year on year fall, the upfront costs needed by buyers who are looking to take out a mortgage are still rising. Lenders have been raising their deposit levels for some time, and are only offering their most competitive deals to those with a substantial sum of money to put down by way of a deposit.

One industry official said: ‘Availability of mortgage deals remains the biggest issue for borrowers who do not have equity in their homes. Those who have benefited from the decade-long housing boom can still qualify for the most competitive rates. However, first-time buyers or those who have entered the property market recently will struggle to qualify for the most competitive rates.’

Recent Additions:

• Experts comment on inflation and interest rates
• House prices now more than 10% lower than last year
• First direct launches offset mortgage for those looking to remortgage
• Freeze on Mortgages Expected to Continue Until 2010
• Interest rates for August remain on hold

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