Good News For Adverse Borrowers As Deposit Requirements Ease

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There is a welcome relief to homeowners and first-time buyers as lenders start to increase their maximum loan to values – the mortgage market is ever so slowly opening up to those with less equity in their property.

According to Moneyfacts, since bank rate reached 0.5% in March 2009, the number of products requiring a minimum of 15% deposit has risen from 169 to 231, those requiring a minimum of 10% have risen from 89 to 105.

But as lenders wanting to appear more accommodating with their loan to value criteria, we are not seeing the same trend in the cost of mortgages, with only few providers cutting rates and the average rates remaining fairly static.

The website says the average two-year fixed rate mortgage is 5.06% at present, identical to July 2009's figure and up from an average of 4.84% more than eight months ago.

Darren Cook, analyst at Moneyfacts.co.uk says: "It is encouraging to see that lenders are becoming more accommodating with their deposit requirements, which should give more opportunities to first-time buyers to take advantage of a buyers market.

"Lenders seem to be getting a bit more comfortable now that property values are levelling out and are prepared to advance to a higher value, but this still comes with a premium with rates relatively higher for smaller deposit mortgage – we need to see more lenders trying to better each other on rates."

To find out whether you have enough equity to get hold of a new loan, talk to your mortgage adviser. They will also outline how much the mortgage is exactly going to cost and how long you will pay that rate – the only way you can find out if a loan is right for you is by talking to someone who can do the maths for you and use their expert eye to compare a loan to your life.

SOURCE: Moneyfacts, 05/11/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.