Small deposit borrowers paying more for mortgages

Jessica Nangle

May 5, 2017

Small deposit borrowers continue to pay more for their mortgages than those with 25% deposits according to the latest AmTrust LTV tracker.

Typically, say AmTrust, it is first-time buyers with small deposits who are facing monthly mortgage payments close to 70% more than those who are able to put down 25% of their property’s value.

Homeowners with a 5% deposit reportedly pay an average of £790 in monthly repayments which is £324 more than the £466 paid each month by those with 75% LTV mortgages.

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AmTrust believes that the continued lender focus on customers with larger deposits and the closure of the Help to Buy Mortgage Guarantee Scheme (HTB2) means a lack of product options for potential first-time homeowners.

Simon Crone, commercial director at AmTrust International, mortgage and special risks, said: “As 2017 progressed the mortgage price war which appears to be raging has not taken in those seeking high LTV mortgage products.

“The end of HTB2 marked something of a watershed with a number of scheme members continuing to offer loans at 90% but not proceeding with their 95% LTV products.

“The catalyst provided by the introduction of HTB2 is in danger of being lost and with a General Election on the horizon plus the ‘Brexit negotiations’ to follow we could be looking at a much more subdued high LTV market for a longer period of time than is necessary.”

The figures come after the Bank of England claimed that average interest rates for those with a 25% deposit have decreased sharply over the past 12 months.

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