Rationing of Mortgages still with us reports London Mortgage Brokers, London Mortgage Advice Wednesday, 4th August 2010

Mortgage lenders continue to apply stringent criteria. with borrowers still struggling to secure a mortgage without a large deposit.

The number of homeloans available has increased by two-thirds since the start of the year, rising from 1,414 products in January to 2,351 today calculates Moneyfacts, the financial data service.

But, 58% of today’s mortgage offers still demand a minimum deposit of 25% of the property’s value.

Accounting for just 8% of the mortgages on the market, more mortgage deals however are available at 90 % loan to value, requiring a 10% deposit.


Explained Michelle Slade of Moneyfacts,
"There has been no real movement in the overall number of new mortgages available on the market [in the past month], but those that are available continue to be more competitive,"

"Many of the best deals are now available for a 25% deposit, having previously only been available for those with a 40% deposit."

The average two-year fixed rate deal now comes with an interest rate of 4.5% compared to 4.9% in January. Three-year fixed rates now cost on average 5.2% instead of 5.5% at the start of the year, and five-year deals now cost 5.6% instead of the 6.1% charged in January, according to Moneyfacts,

Given this information, these average rates mask a wide range of prices, which vary according to deposit size. The journal also says that a two-year fixed deal with a 10% deposit is charged at an average 6.2%, but a 25% deposit brings that down to 4.1% while a 40% deposit attracts an interest charge of just 4%.