Buyers may have to put down minimum 15 percent deposit

According to a recent report property purchasers of the future may find that they have to put down a deposit of at least 15 percent of the property value as part of a shake up of the mortgage lending industry, which has been in dire straits since the onset of the global credit crunch. This could drive many more people out of the property market, particularly first time buyers.

Whilst in the past first time buyers were able to get mortgages for 95 percent or 100 percent of the property value, and in some cases even 125 percent of the property value, banks have now started demanding far larger deposits to cut their risks in the current financial climate. Many are now finding that the best that they can get is a mortgage that requires at least 10 percent of the property value by way of deposit.

However, the chairman of the Financial Services Authority, Lord Turner, is considering a ban on all loans of close to the property value, and this could means that consumers are required to put down a deposit of at least 15 percent in order to get a mortgage. For first time buyers this could spell disaster, as many simply do not have the available cash to put down this level of deposit.

Lord Turner has expressed concern that regulation on banks in the past was too slack, and this helped to fuel the crisis that has come about over the past couple of years. He said that had regulations been tighter a lot of the problems could have been avoided.