Mortgage deposits fall for first-time buyers
There are two pieces of good news for potential first-time buyers today, with average deposits starting to fall and the launch of a mortgage indemnity scheme in Scotland.
According to the latest figures from the Council of Mortgage Lenders (CML) the average deposit required by a first-time buyer has fallen to 19 per cent, its lowest level since November 2008.
In total, 19,000 house purchase loans were advanced to first-time buyers in July, worth £2.5 billion in total.
This represents a 1 per cent fall from the 19,200 loans for house purchase advanced in June.
However there was a 5 per cent increase in mortgage lending to all home buyers in July, with 49,500 loans advanced worth £7.6 billion in total.
Although this suggests an improvement in the property market, the level of borrowing is still 50 per cent lower than it was prior to the credit crunch.
CML director general Paul Smee said: “July’s figures show a gradual improvement in the market, with lending approaching the sort of levels we saw at the end of the stamp duty concession.
“While overall market conditions remain tight, new initiatives such as Funding for Lending and NewBuy have the potential to help lending to continue to ease gradually.”
The Scottish Government has today launched a mortgage indemnity scheme called MI New Home, which is similar to the NewBuy scheme available in England.
MI New Home will help borrowers access 90 to 95 per cent LTV mortgages on new build homes in Scotland, up to a maximum sales price of £250,000.
The Scottish Government is guaranteeing the scheme, which currently offers mortgages from just Nationwide and Royal Bank of Scotland, although further partners may join.
The MI New Home scheme was officially launched today by deputy first minister and cabinet Secretary for infrastructure, investment and cities, Nicola Sturgeon.
Ms Sturgeon said: “I hope this new scheme encourages lenders to offer more high loan-to-value mortgages to credit-worthy borrowers who are currently unable to put down the large deposits demanded in the current mortgage market.”