Friday, May 20, 2022
Real EstateUK

Low-deposit mortgages return to UK market


The could be a good news for the market as it is likely to spark a rise in the demand for property

Mortgage products requiring 10% deposit from homebuyers have become much more common in recent weeks, new figures show.

Around 277 such deals are now on the market in the UK, compared to 160 a month ago, according to financial information service Moneyfacts.

The latest data reveals that mortgage products for homeowners with a deposit of 10% of their property’s value have risen significantly, up from just 44 deals that were available last September.

This could be good news for the market as it is likely to spark a rise in the demand for property, although the cost of mortgages remains an issue for some.

The average two-year fixed rate of 3.56% is nearly 1% above the same rate a year earlier, and while the five-year fixed rate equivalent at 3.68% has fallen by 0.04% since the start of the month, it is also 0.77% higher the February 2020 rate.

But there are more cashback offers for buyers with a 10% deposit, up from 50 to 83 over the past month, available from 17 lenders compared to 12 in January.

Eleanor Williams, finance expert at, said: As the stamp duty holiday deadline approaches, RICS latest research indicates that January has seen the first fall in residential activity in seven months. However, first-time buyers who found themselves unable to proceed last year, and who may not be impacted by the end of the stamp duty holiday if they are purchasing below a property value of £300,000, could buck this trend, as there may be good news for those ready to take their first step on the property ladder.

Options for those with a 10% deposit have improved greatly over recent months, with 15 more providers offering 90% LTV products since the start of this year, and the number of products themselves increasing by 117 since the beginning of January. This means that there is far greater choice for would-be buyers in this area of the market. There are also more cashback deals now available to first-time buyers with a 10% deposit too, increasing to 83 from 50 a month ago, Williams said.

She said, while average rates – historically often higher than those available in lower LTV brackets due to risk – are above where they were a year ago, those for whom the longer-term stability of a five-year fixed may suit their circumstances may be pleased to note this rate has reduced 0.04% since the start of this month alone.


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