Small Deposit Mortgages Increasing

Wherever you are in the UK, whatever age you are, the main obstacle for first time buyers has always been the size of deposit needed to buy a property.  The good news for sellers and first time buyers alike is that in 2017, the number of people purchasing properties with small deposits has been increasing.

According to research from residential chartered surveyors’ firm, e.surv, buyers with a small deposit accounted for over a fifth of the mortgage market in March this year.  The proportion of buyers with small deposits has risen steadily since December, with March marking the third consecutive month for growth for this group.

The majority of the small deposit buyers are first-time buyers – so why is this sector growing?  Well, alongside various government schemes to encourage buyers onto the ladder with small deposits, first time buyers have also been helped by changes to the buy-to-let market, which has increased the supply of homes to meet the demand of first-time buyers.

The survey also found that mortgage customers with larger deposits (60% or more) still make up a larger portion of the market by a significant margin.  Borrowers with the biggest deposits are always likely to dominate the mortgage market, as lenders see these buyers as lower risk and will usually lend to these buyers above any other, but that doesn’t mean that lenders aren’t also targeting other parts of the market. With mortgage rates so low and competition so strong, many lenders know that in order to compete they have to cater to the burgeoning small deposits/first-time buyer market. Borrowers with small deposits are the beneficiaries of this, with finance available to them that might not have been there even six months ago.

Either way, the situation for those with smaller deposits is more promising than it has been for some time, which will give hope to those who had started to give up on their home ownership dream altogether.