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Consumers still having to pay high deposits for affordable mortgages

October 7, 2008 by admin  
Filed under News, News-Mortgages

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Over recent months getting a mortgage has become increasingly difficult and expensive, with many lenders reserving their best deals and lowest interest rates for those that are able to put down a sizeable deposit as opposed to the traditional 5% deposit. The changes in mortgage lending and costs have come about as a result of the global credit crunch, which swept across the nation last summer.

Since last summer affordability has become especially difficult for many people, particularly first time buyers. Many lenders have been pushing up borrowing costs, including increasing arrangement fees on mortgages and pushing up the amount of deposit required for a reasonable rate of interest on the loan. Many people have found themselves unable to get a mortgage loan because of these high costs, as well as due to tighter credit conditions stemming from the credit crunch.

Industry officials have recently stated that consumers that are looking to buy a home will still need to find a huge deposit in order to access best buy deals. According to recent figures the average house price in England and Wales is now £180,781, and this means that borrowers may be looking for a deposit of around £37,000 in order to be able to access the best buy mortgage deals.

One official stated: ‘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.’

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