Could down payments put people off buying?
first-time buyers hopeful that this is the year they will purchase their first home may be concerned that they still need to save up a sizeable down payment in order to take out a mortgage.
According to Moneyfacts, while the availability of lower deposit mortgages has nearly doubled year-on-year in March, the proportion of new mortgage deals that require a down-payment of at least 25 per cent is still very high at 57 per cent.
Meanwhile, there has been a 90 per cent annual increase in mortgage deals requiring a down-payment of between ten and 15 per cent.
However, with property prices continuing to rise following the UK's emergence from recession, such a figure may still be well out of the affordable price range of many Britons.
Such a situation may see people instead considering flats to rent in the London borough of Islington or another part of the capital, where they will not need to save for as long in order to move into their home.
Commenting on the news, Ben Wilkie, editor of What Mortgage, said: "I would think that 95 per cent loan-to-value would be on the agenda fairly soon, but I don't think it will go any higher than that."
Written by Andy Britten
Published 9th March, 2010
© 2010 Estates IT Limited
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The need to save up a costly down payment in order to secure a mortgage may convince many consumers to look for property to rent in London.