More mortgage choice for first-time buyers
The number of low-deposit mortgages on the market has more than doubled in the past year. There are currently 49 mortgages available at 95% loan-to-value (LTV), compared to 24 in January 2011. This is a huge turnaround since April 2009 when there were only three mortgages on the market that required a 5% deposit.
The choice in the whole residential mortgage market has increased over the past year from 2,527 to 3,180, according to comparison website Moneyfacts. But these deals are failing to keep pace with demand – deals tend to be around for just 27 days before becoming fully subscribed, compared with a historic average of 30 days.
As well as a huge increase in the number of 95% LTV mortgages, the number of 90% LTV deals has also risen to 280 from 199 in January last year.
"First-time buyers are always going to struggle to find an often unrealistic 40% deposit, so thankfully, we are seeing the 90% and 95% LTVs start to return to the market," says Sylvia Waycot, spokesperson for Moneyfacts.
"But a lot of providers still prefer the assurance of a proven track record, which is shown by some of the incentives offered to those remortgaging such as free legal fees, free valuations or cash back."
Despite the increase in deals, there are concerns that lenders will tighten their lending criteria this year as a result of the weak economic backdrop, meaning that fewer buyers will be able to take advantage of the mortgages on offer.
Changing mortgages without moving home. Property owners chiefly remortgage to get a better deal but some do so to release equity in their homes or to finance home improvements, the costs of which are added to the new mortgage. Even though you’re not moving house, you still need to engage solicitors, conveyancing and the new lender will require the property to be surveyed and valued.
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