View more on these topics

Lenders favouring those with high equity

Lenders are continuing to pick and choose their customers by reducing mortgage rates only for those with significant amounts of equity, shows the latest research from Moneyfacts.

Although fixed mortgage rates are falling, they are only doing so for those with decent deposits, shows the research.

By contrast, the rates available to those borrowers with small deposits are increasing.

The average two-year fixed rate for a borrower with a 10% deposit has increased steadily since April 2009, now standing at 6.48%, the highest level since December 2008.

However, the average rate for a borrower with a 25% deposit now stands is 4.27%, the lowest level since July 2009.

Over a term of two years, this means that a borrower with a 10% down payment will pay £4,728 more than one with 25%.

A spokeswoman for Moneyfacts, says: “While lenders are slowly increasing the number of deals available to those with a small deposit, which should be good news for first time buyers, they continue to make them pay a heavy price.

“Lenders continue to cherry pick the best customers and appear to be actively discouraging borrowers with a small deposit from remortgaging.

“First-time buyers are being offered little incentive to enter the market and there are no real signs of things getting better for them anytime soon.”


Patient - thumbnail

Company sick pay – new findings

Research by insurer LV= suggests that some 11 million employees in the UK have no company-paid sick leave entitlement. So if an employee from within the above grouping cannot work through illness or injury for any period of time, their only income would likely be that provided by state benefits alone.


News and expert analysis straight to your inbox

Sign up
  • Post a comment
  • Steve Brown 15th February 2010 at 4:01 pm

    Some amazing information from moneyfacts. Apparently moneyfacts are now researching the toilet habits of bears to see whether on not they favour woody areas.

  • Martin Tapper 15th February 2010 at 2:45 pm

    Demand from FTB is high, however lender’s critieria and penalty interest rates for those who are “marginal” borrowers are stifling demand and the benefit it would bring.
    FTBs are an essential element to a healthy housing market and a gradual easing of lending conditions is needed to stimulate growth. The present slow and ponderous approach is hardly driving the market up.
    Regretably Mr Brown’s cabinet refused to prolong the increased stamp duty threshold, which had such a positive effect on the market. We will soon see what effect this will have on house sales.
    Without a coordinated, firm approach to drive the market forward there can be little buyer confidence that the first step onto the ladder is worth taking at the moment, in spite of the strong historical evidence that housing prices will grow again, albeit more sedately than in recent years.

  • Jon 15th February 2010 at 12:32 pm

    A Mortgage Indemnity Guarantee by a different name?

    Perhaps FTBs should be staying out of the market until it settles – property prices are still expensive by historic standards and FTBs with small deposit risk negative equity if property prices fall, even slightly. Many rental properties represent good value for money and many potential FTBs would be better served by renting for the next year or so.