The number of mortgages with a 5% deposit has plummeted in the past five months, dealing another hammer blow to first-time buyers looking to get on the property ladder.
According to Moneyfacts.co.uk, the number of mortgage products with a 5% deposit has plummeted by 16% since March to 225.
With many experts predicting a fall in house prices following the vote to leave the EU, the news will come as further disappointment for first-time buyers looking to get on the first rung of the housing ladder.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, urged borrowers to take advantage of the deals available now in order to not miss out.
She said: “It is particularly bruising when many hope that the predictions of cheaper houses would help them realise their dream sooner than expected.
“Unfortunately, a downturn in property prices can have a significant impact on the higher loan-to-value mortgage sector. A negative turn in prices effectively depreciates the provider’s resale value of the bricks and mortar, which results in providers reeling in their criteria and paring back their offerings to this section of the market.
“With many uncertainties in the market, providers might be treading carefully and more cautious about what they choose to offer the higher risk borrower, such as high cash incentives and multiple product options.
“It is still unknown what effect the Help to Buy Mortgage Guarantee scheme ending this year will have, but the number of products at 95% LTV is likely to dwindle yet again, providing a further blow to borrowers with small deposits who were getting accustomed to the plethora of choice they had.”
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