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Lower deposits for first-time buyers

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by Gill Montia

Mortgageforce reckons that the deposits demanded of first-time buyers have been falling at an average rate of 3% per month.

According to the broker franchise, the typical deposit for a purchaser entering the housing market stood at 28.6% in June but came down to around 25% in July and just over 21% in August.

The group’s technical manager, Katie Tucker, says: “More generous deals are available; the ongoing stability of house prices reduces the risk of negative equity and repossessions that lenders are keen to avoid, so we should see more accommodating terms from them now.”

Ms Tucker also advises borrowers to be clear about the difference between “discount” and “tracker” loans, explaining that discount rates do not follow the base rate.

They are instead linked to bank and building society standard variable rates, which can be changed at at the lender’s whim.

She adds: “Although tracker and discount rates are looking very low currently, first-time owners or anyone on a restricted budget should consider very carefully whether they could continue to afford their mortgage payments if that rate does increase by a few percent.”

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News posted: September 15, 2009

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