5% deposit mortgages difficult to find
A recent report has indicated that the traditional 95% mortgage, with just a 5% deposit from the borrower, is becoming increasingly difficult to find. Until the onset of the credit crunch borrowers could easily get 95% mortgages, 100% mortgages, and even 125% mortgages, but over the past year all of this has changed. The 125% mortgage was the first to disappear as a result of the conditions stemming from the global credit crunch, and this was quickly followed by the 100% mortgage.
However, it now seems that the traditional 95% mortgage is also disappearing, with fewer and fewer lenders offering this option. Most lenders are demanding a higher deposit level of 10% or more from borrowers, and this has made things increasingly difficult for first time buyers and those with low incomes, as they do not have the available deposit to get an affordable mortgage and purchase a property. This, in part, is causing the current slump that is being seen in the housing market.
Although some of the major lenders are still offering mortgages that require just a 5% deposit, this are falling in numbers, and those that do offer them often charge a far higher rate of interest than with loans where higher deposits are paid.
One industry official said that around one lender per week was dropping out of offering 95% mortgages. Mortgage lending has slumped over the past year as a result of the ongoing financial crisis, and things have become increasingly difficult for borrowers looking to get an affordable mortgage loan.
One industry official said: “For borrowers there is a danger of a much smaller choice of lenders if the situation in the banking market does not improve in the very near future.”
Another said: “There is so much risk to lenders that they want to concentrate on lending to people with a lower risk profile.”
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Hello,
Is there any chance of the 5% deposit option being more available again soon ?
You would think that the more people buying houses would kick start the economy again.
Also what constitites a first time buyer, for example I have been out of the country for 10 years , my last mortgage in the UK was over 10 years ago….would I be a first time buyer now in the UK.
Is Gordon Brown going to do the first time buyers grant , this would stimulate the economy.
Thank you.
Mike Dawson