Little change in high LTV mortgages

Updated: 

Estate agencyChris Ison/PA Wire

Would-be home buyers with a 5% deposit have only seven more mortgage choices available to them since an £80 billion scheme to boost lending started two months ago, a study has found.

While the "already well-serviced" market for those with deposits of 20% or more has continued to grow, little has changed for those scouring for a mortgage deal with smaller amounts put by, consumer help website Moneyfacts said.


Those with a 25% deposit have more than 850 deals to choose from, while those with only 5%, many of whom are struggling first-time buyers, have fewer than 70 choices.

People with a 10% deposit have 37 more mortgages to choose from than they did two months ago, while those with a 25% deposit, who are often seen as less "risky", have 82 more deals to select from, the website found.

The funding for lending scheme was launched at the beginning of August by the Bank of England and the Treasury to reinvigorate the flow of credit to households and businesses by giving lenders access to cheap funding.

A Bank of England survey of lenders said last week that mortgage availability has increased "significantly" in recent months, with funding for lending cited as an important contributing factor.

The Bank's survey reported that lenders expected to see an increase in mortgage availability to borrowers spread across loan-to-value (LTV) ratios.

Moneyfacts.co.uk spokeswoman Sylvia Waycot said: "You could be forgiven for thinking that one of the first areas to benefit would be the first-time buyer market, which is well-documented as a nightmarish struggle for those trying to get a step on the housing ladder. The sad truth is that there are only seven more 95% mortgages available than before the scheme started.

"Even if you were to add together the additional 95% and 90% mortgages that first-time buyers crave, they would still only amount to a paltry 44 more choices."

People with a 20% deposit have 83 more mortgages to choose from than they did two months ago, a similar increase to those with 25%. Lenders generally have toughened their borrowing criteria in recent months, meaning people have higher hurdles to jump to take out a mortgage in the first place.

© 2012 Press Association

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