Belfast Telegraph

Mortgages still only open to big depositors

By Simon Read

Britain's mortgage lenders are continuing to apply the brakes to the housing market, with new data revealing that mortgages remain far harder to get than before the credit crisis.

Moneyfacts, the personal finance analyst, said that while the number of new mortgages being offered has risen by two-thirds since the beginning of the year, they are only available to borrowers with large deposits.

Three in five of all the current mortgage deals in the UK require borrowers to have a deposit of at least a quarter of the value of the loan, although that does represent a marginal improvement on the previous funding famine, said Michelle Slade of Moneyfacts. "Many of the best deals are now available for a 25% deposit, having previously only been available for those with a 40% deposit," she said.

Moneyfacts' figures, published yesterday, reveal that the number of mortgage deals on offer has climbed 66% to 2,351, from just 1,414 in January. But 58% need a 25% deposit, while borrowers with only a 10% deposit have a choice of just 8% of all deals available.

"Lenders may offer some mortgages to those people with just a 10% deposit but the reality is that they prefer less risky borrowers with at least 25% to put down," said Melanie Bien, a director at the mortgage broker Private Finance.

Andrew Hagger, of the financial comparison site, said that lenders remained nervous about repeating the lending mistakes of the past.

"Competition among mortgage lenders has intensified throughout 2010 but it's no surprise that over half the products on offer still require a minimum 25% stake," he said. "We may technically be out of recession but the economic situation is still fragile and lenders are taking a far more measured approach in their mortgage lending."