The challenge of saving up enough cash for a deposit on a mortgage is something many would-be homeowners will be familiar with. However, the outlook may be brightening in this area, with a significant number of mortgages available for those with just 5% of the property price available to put down as a deposit.
Statistics indicate there are now 288 mortgage deals available for people in this position. This is the biggest number seen at the midpoint of the year since the financial crisis struck in 2008.
Plentiful 95% mortgages available until the financial crisis hit
Many will recall the upheaval when the financial crisis took hold in 2008. Before this happened, buyers with just 5% of the property price available to put down as a deposit had over 900 mortgages to choose from. This swiftly changed once the financial crisis took hold. Indeed, at one point eight years ago, in June 2009, would-be buyers with a small deposit had just six products to evaluate.
However, over the intervening years, the numbers have cautiously increased again. 12 months on from the low point of six deals, the number had more than tripled to 20. By June 2012, 63 deals were available.
Stricter criteria
“Lots of would-be homebuyers will know the criteria in place for being accepted for a mortgage are far stricter now than they were before the financial crisis began,” said Darren Pescod, managing director of The Mortgage Broker Limited. “However, despite the increase in regulations, there are far more 95% mortgages available today than has been the case in recent years.
“Even two years ago, buyers with a smaller 5% deposit only had around 190 deals to choose from. We saw a big jump last year, up to 251 products, before the latest jump to the current 288 products was seen. This is good news for anyone with a far smaller deposit to work with, but it is also wise to be cautious and to evaluate the deals on offer. And as always, the more homebuyers can put down as a deposit, the better the interest rate on any mortgage product is likely to be.”
More proof things are getting easier for first-time buyers?
Recent figures have shown more first-time buyers are getting onto the housing ladder. There was a surge of activity in this part of the market in March, for example, both month-on-month and year-on-year.
The best interest rates are still those offered to those with larger deposits, but for those limited in their options, it is good to see an increase in the available products to choose from.
However, with the Bank of Mum and Dad still responsible for providing a cash injection to help with the all-important deposit, many will still be beyond benefiting from these deals at present. Despite concerns of a house price slump, recent reports suggest we may be in for another rise. However, given the outcome of the General Election, it remains to be seen whether this will hold true.
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