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Return of the low deposit mortgage

In perhaps one of the most surprising signs yet that the financial downturn is a thing of the past, mortgage lenders are reintroducing the 95% mortgage for homebuyers who can only afford a small deposit. What is fuelling a rush to help first–time buyers onto the housing ladder?

The high street is seeing a welcome return of the low–deposit home loan for the first time since the financial downturn in 2007, with lenders joining the surge to offer a 95% mortgage.

Before 2007, getting a mortgage to buy a home was relatively straightforward as long as you had stable earnings and a small sum to put down as a deposit. Then the global banking meltdown put an end to easy credit, making lenders increasingly wary of approving mortgages for anyone without a healthy five-figure sum to put on the table first.

A growing list of high-street lenders are launching a range of mortgages aimed at buyers eager to get a foothold on the property ladder without a huge deposit to put down.

Money experts point to two factors fuelling the growth of these products. Firstly, house prices are continuing to soar, squeezing the market for the crucial first-time buyer by reducing the purchasing power of savings.

Lastly, the government’s highly successful Help to Buy scheme, which topped up deposits to give first-timers a leg-up into their first home, comes to an end in 2016. High-street lenders are now falling over themselves to step into the vacuum, offering mortgages which are not part of Help to Buy but offer 95% home finance without government help.



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