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Post-recession high for 5% deposit deals

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Written by: Christina Hoghton
18/12/2015
A record number of 95% LTV mortgages are on offer for borrowers with just 5% upfront, and the rates are falling too.

The number of mortgages on the market for borrowers with just a 5% deposit has risen to its highest level since the recession, according to a report out from Genworth and Moneyfacts.

There were a record 260 products available in November at 95% loan to value (LTV), a year on year rise of 84%, from 141 last November.

In fact, there are more than six times as many 95% LTV loans available compared to September 2013, before the Government’s Help to Buy mortgage guarantee launched.

Cheaper deals

Even better, for those without large deposits, the average mortgage rate for 95% LTV deals has fallen to a record low of 4.12%, according to the Genworth/Moneyfacts research.

This is the lowest level since the recession and a fall of 1.15 percentage points over the last year.

But despite the growing product range, cheaper deals, and a rise in first-time buyers, Genworth’s analysis raises concerns that lending at 90-95% LTV is actually in decline.

There was £1.61bn lent through 90%-95% LTV loans in the third quarter of 2015, down by more than 27% from the same period in 2014.

Simon Crone, Genworth vice president – Mortgage Insurance Europe, said: There is little doubt that the Help to Buy mortgage guarantee has played an important role in rejuvenating the high LTV market. However, beneath the surface, it remains a long way short of full health and there is a danger that what we are seeing is a temporary restoration of appetite from lenders thanks in no small measure to Government efforts.

“For many aspiring first time buyers, raising the average deposit of 16% is simply not an option – especially in places like London where this amounts to vast sums of money. Hopeful buyers struggling to put money aside each month can quickly see deposit sums getting further and further out of reach, which is desperately disheartening when many can afford the repayments on a mortgage once they’ve got over this initial hurdle.”

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