Choice of low-deposit deals hits highest for 17 years

The housing market in the UK is experiencing a surge in low-deposit mortgages, offering more options for first-time buyers. According to data from Moneyfacts, the number of mortgages requiring a 5% or 10% deposit has reached its highest level since the financial crisis of 2008. This increase in choice is a positive development for prospective homeowners, although house prices and mortgage rates remain high compared to previous years.

With 442 mortgages available for buyers with a 5% deposit and 845 products for those with a 10% deposit, there is a wide range of options to choose from. However, borrowers with lower deposits can expect to pay higher mortgage rates, with an average rate of over 5% for a 10% deposit compared to under 5% for a 40% deposit. Despite the challenges of saving for a deposit in the current rental market, the increase in mortgage options is a step in the right direction for aspiring homeowners.

While the availability of mortgages has improved, the competition in the housing market remains fierce. Homes are typically listed for just over a month before a sale is agreed, according to data from property website Zoopla. Sellers and buyers need to act quickly to secure a sale, with homes in England and Wales spending an average of 36 days on the market before an agreement is reached. The fastest-selling homes are two-bedroom properties, which sell in an average of 23 days, while larger homes take slightly longer.

Buyers and sellers need to be strategic in setting asking prices and seeking advice from local agents to navigate the competitive market. The data from Zoopla suggests that homes in northern regions of England tend to sell faster than those in the south, where prices are higher. Setting the right asking price is crucial for a quick sale, as aiming too high can impact saleability and prolong the selling process.

Overall, the increase in low-deposit mortgages and the competitive housing market present both challenges and opportunities for buyers and sellers in the UK. As the market continues to evolve, staying informed and seeking professional advice are key factors in navigating the complex process of buying or selling a home. Low-deposit mortgage deals are at their highest level in 17 years, providing a boost for first-time buyers. According to data from financial information service Moneyfacts, there are more low-deposit mortgages available now than at any time since the financial crisis of 2008.

The number of mortgage deals that require a deposit of 5% or 10% has risen significantly, with borrowers now having a wider range of options to choose from. For buyers who can offer a 5% deposit, there are 442 mortgages available, compared to just 204 two years ago. Similarly, borrowers with a 10% deposit now have 845 products to choose from, up from 684 in April 2023.

Despite the increase in availability, borrowers with lower deposits still face higher mortgage rates compared to those who can afford a larger deposit. On average, borrowers with a 40% deposit typically pay a rate of under 5%, while those with lower deposits pay well over 5%.

The rise in low-deposit mortgage options comes at a time when the UK housing market is relatively settled, although uncertainties over interest rates and changes to stamp duty in England and Northern Ireland persist. Additionally, competition in the housing market remains tough, with homes typically listed for just over a month before a sale is agreed, according to property website Zoopla.

Rachel Springall, from Moneyfacts, noted that the increase in mortgage product availability is a positive step for aspiring homeowners, especially those whose ability to pay a deposit is stretched. However, she highlighted that only 6% of all mortgage deals across fixed and variable rates require a 5% deposit, suggesting there is still room for improvement in this area.

Ultimately, the flourishing choice of low-deposit mortgages is a welcome development for first-time buyers looking to enter the property market. Despite the challenges posed by rising house prices and mortgage rates, the availability of more affordable mortgage options provides hope for prospective homeowners facing financial constraints. If not, enter the total you are looking to borrow.\u003c/div\u003e\n \u003c/div\u003e\n \u003cinput id=form_input_1 class=input__text type=number inputmode=numeric aria-describedby=info-button-1 inputmode=numeric min=0 max=10000000 step=1000 placeholder=165,000 value=165000\u003e\n \u003c/div\u003e\n \u003cdiv class=label__container\u003e\n \u003clabel class=label__input for=form_input_2\u003eHow long will you take to pay it back?\u003c/label\u003e\n \u003cbutton class=label__info-btn data-id=info-button-2 aria-label=More info on repayment periods\u003e\u003c/button\u003e\n \u003cdiv class=info-box info-button-2\u003e\n \u003cdiv class=info-box__text info-button-2\u003eIf you have an existing mortgage enter the total number of years remaining. If not, enter the total number of years you are looking to borrow over.\u003c/div\u003e\n \u003c/div\u003e\n \u003cinput id=form_input_2 class=input__text type=number inputmode=numeric aria-describedby=info-button-2 min=1 max=50 step=1 placeholder=20 value=20\u003e\n \u003c/div\u003e\n \u003cfieldset class=label__container\u003e\n \u003clegend class=label__input \u003eWhat is your current…\u003c/legend\u003e\n \u003cdiv class=input__radio-wrapper\u003e\n \u003cdiv class=input__radio-group\u003e\n \u003cinput id=form_radio_input_1 class=input__radio type=radio name=form_radio value=interest rate aria-describedby=info-button-3 checked\u003e\n \u003clabel class=label__radio for=form_radio_input_1\u003einterest rate\u003c/label\u003e\n \u003c/div\u003e\n \u003cdiv class=input__radio-group\u003e\n \u003cinput id=form_radio_input_2 class=input__radio type=radio name=form_radio value=monthly payment aria-describedby=info-button-4\u003e\n \u003clabel class=label__radio for=form_radio_input_2\u003emonthly payment\u003c/label\u003e\n \u003c/div\u003e\n \u003c/div\u003e\n \u003cbutton class=label__info-btn data-id=info-button-3 aria-label=More info on interest rates\u003e\u003c/button\u003e\n \u003cbutton class=label__info-btn data-id=info-button-4 aria-label=More info on monthly payments\u003e\u003c/button\u003e\n \u003cdiv class=info-box info-button-3\u003e\n \u003cdiv class=info-box__text info-button-3\u003eFor those with a mortgage enter the rate for your current fixed term. For those without a mortgage enter an interest rate from another source, such as a bank’s mortgage rate calculator.\u003c/div\u003e\n \u003c/div\u003e\n \u003cdiv class=info-box info-button-4\u003e\n \u003cdiv class=info-box__text info-button-4\u003eFor those with a mortgage enter the amount you pay for per month. For those without a mortgage enter the amount you would be paying.\u003c/div\u003e\n \u003c/div\u003e\n \u003c/fieldset\u003e\n \u003cdiv class=label__container\u003e\n \u003clabel class=label__input for=form_radio_input_1\u003eChoose an interest rate to compare with…\u003c/label\u003e\n \u003cinput id=form_input_3 class=input__text type=number inputmode=numeric aria-describedby=info-button-3 min=0.1 max=100 step=0.1 placeholder=5.5 value=5.5\u003e\n \u003c/div\u003e\n \u003cbutton class=button–calculate aria-label=Calculate\u003eCalculate\u003c/button\u003e\n \u003c/div\u003e\n \u003cdiv id=mortgage-calc-results class=mortgage-calc__results\u003e\n \u003cp id=results-text\u003eAt this rate, your payments could change by…\u003c/p\u003e\n \u003cp id=results-change\u003ed