First-time buyers now required to deposit £20k

Posted: 27 Nov 2008 11:28:50 GMT

First-time buyers are being required to deposit £20,000 in order to secure a mortgage, it has been discovered, suggesting that confidence in the housing market is at an all-time low.

Figures from the Council of Mortgage Lenders (CML) demonstrate that a deposit of 16 per cent is required from the average first-time buyer.

However, considering that the value of a property purchased by the average first-time buyer is £124,000, 16 per cent adds up to £20,000 - a significant sum for many of those hoping to climb onto the first rung of the property ladder.

Furthermore, a Guardian report highlights that not only is the cost of a deposit high but those who cannot afford a large deposit will have an even more expensive mortgage to repay.

Speaking to the newspaper about the difference in the cost of a mortgage depending on the size of a deposit, Francis Ghiloni, of the home loans website mform.co.uk, explained some deals typical of the current market: "If the borrower has a 20 per cent deposit, rates rise to 5.99 per cent for trackers and to 6.45 per cent for fixed rates.

"If the borrower only has a ten per cent deposit, then there are no trackers and the lowest rate for a fixed deal is 6.45 per cent."

To avoid expensive estate agent fees buyers and sellers alike may benefit from purchasing and selling homes online, instead of on the high street.

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