Home mortgage deposits rise due to credit crunch
The loan-to-value ratios of mortgages currently on the market are higher than they were two years ago, new research has found.
New research has found that first time buyers are paying more upfront for a home mortgage because lenders have decreased the loan-to-value ratio of products in the past two years.According to Moneyfacts, in August 2007 the average loan-to-value being offered was 91 per cent, but 24 months since the credit crunch began this figure has dropped to 74 per cent.
This has resulted in those taking out a new home mortgage on a £150,000 property paying £25,500 more now than they would have done two years ago.
The number of fixed-rate mortgages on the market requiring low deposits has also been reduced as lenders alter their criteria to decrease the risk of customers not being able to meet repayments.
Borrowers could choose between 585 90 per cent loan-to-value mortgages in August 2007, but this figure has dropped by 98 per cent in two years and now rests at just nine.
Similarly, the nine 60 per cent loan-to-ratio home mortgages being offered before the recession has inflated to 211, a boost of a staggering 2,244 per cent.
Michelle Slade, spokesperson for Moneyfacts, commented: "A threefold increase in the size of the average deposit is likely to hit first-time buyers the hardest.
"Unless they can get help from the bank of mum and dad, many may have to defer their dreams of owning their own home for a number of years until they have saved more," she added.
Recent figures from Nationwide Building Society showed that house prices were up for the third month in a row in July, which could affect first-time buyers looking for a mortgage.
The report claimed that house prices were 1.3 per cent higher in the month than in May and the rate of change was also greater.
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