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.

Property transactions decline in April

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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