Higher deposits needed to more affordable mortgages

Many consumers are being hit with crippling upfront fees and charges in order to access the best buy mortgages on the market, according to a recent report. The mortgage market has been suffering over recent months as a result of the global credit crunch, which has resulted in increased costs, tighter credit conditions, and fewer mortgage products on the market.

The number of mortgage products on offer has fallen by around two thirds over the past year. Lenders have raised costs in many areas, such as charging crippling arrangement fees and demanding far higher deposits in order to provide access to their best buy deals. Industry officials have said that some borrowers could be looking at finding close to £40,000 to get access to some of the best buy deals.

One official stated: ‘Availability of mortgage deals remains the biggest issue for borrowers who do not have equity in their homes. Those who have benefited from the decade-long housing boom can still qualify for the most competitive rates. However, first-time buyers or those who have entered the property market recently will struggle to qualify for the most competitive rates.’

There are concerns amongst industry professionals that whilst interest rates have either been falling or remaining on hold over the past six nine months, and whilst house prices have been falling, borrowing costs and deposit levels for properties are still high.