Few 90% Mortgage Deals Tuesday, 16th June 2009

Within the current mortgage market it even more difficult for first-time buyers to get on the property ladder where.In just two-and-a-half years, mortgages requiring a 10% deposit have almost vanished.

It is difficult for existing homeowners to move up the ladder acknowledging that first-time buyers have long since been described as a core part of the property market.

Without having a significant deposit,and since the onset of the credit crunch, mortgages have been harder to secure .

According to research from price comparison website moneysupermarket.com there are now just 102 mortgages for people borrowing up to 90% of their home’s value, this is down from more than 3,000 different deals at the start of 2007.

Moreover, first-time buyers are being hit with high interest rates with the average rate on a 90% loan-to-value (LTV) mortgage currently at 6.23%.

What conclusions can we draw from this? The Government has failed to get mortgage lenders to open their books to first-time buyers. A 10% deposit is all most first-time buyers can expect to afford, so by pulling 90% LTV deals, and increasing rates on the remaining deals, lenders are keeping first-time buyers out of the house buying process - which simply creates a stagnant housing market.

The Council of Mortgage Lenders (CML) said last week that the number of loans approved for house purchases in the UK rose by 16% in April compared with March.

At the same time, the Royal Institution of Chartered Surveyors (Rics) reported that new buyer enquiries rose for the seventh consecutive month in May, while completed sales were at their highest since August 2008.