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Size of required mortgage deposits begin to lessen

Size of required mortgage deposits begin to lessen

Category: Mortgages

Updated: 05/11/2009
First Published: 05/11/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Homeowners and potential first time buyers could be forgiven for raising a glass to the news that lenders are beginning to increase their maximum loan-to-values (LTVs).

Providers have been notoriously cautious since the economic downturn. However, figures from have revealed that the number of home loan products which require a deposit of 15 per cent has risen from 169 to 231 since the Bank of England base rate of interest was cut to 0.5 per cent in March.

Similarly, the number of mortgage requiring a deposit of just ten per cent has increased in the eight month period, up from 89 to 105.

"It is encouraging to see that lenders are becoming more accommodating with their deposit requirements. This is likely to give more opportunities to first time buyers," commented Darren Cook, spokesperson at

"Lenders seem to be getting a bit more comfortable now that property values are levelling out and are prepared to advance to a higher level. However, rates are relatively higher for mortgages with small deposits."

While providers appear to be more inclined accept smaller, average rates on such products show little movement.

The average rate on a two year fixed rate mortgage is currently 5.06 per cent, as it was four months ago in July. This has increased from 4.84 per cent in March. The average two year tracker rate is currently 3.76 per cent, moved by just 0.10 per cent since March, when it was 3.86 per cent.

"A few lenders have made cuts to their mortgage rates over the past few years, but there have been too few to announce a formal return to health competition," Mr. Cook added.

"It looks like lenders are trying to increase their lending, but we need to see them trying to better each other on rates."

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