Small deposit buyers could pay 70% more, says AmTrust

Borrowers will small deposits are facing monthly mortgage repayments up to 70 per cent higher than those who can put down a 25 per cent deposit.

The AmTrust Mortgage Loan to Value Tracker shows that first-time buyers with a 5 per cent deposit are paying significantly more for their mortgages.

Those with a 5 per cent deposit face average monthly repayments of £790, compared to a typical repayment of £466 for those with a 25 per cent stake in their home.

Moreover, those with a 75 per cent LTV mortgage have seen their monthly payment fall from £468 at the end of 2016, while the monthly payment for those with a 95 per cent LTV mortgage has leapt from £762 over the same period.  

The average interest rate among those with a 25 per cent deposit has fallen from 1.9 per cent to 1.37 per cent over the past year.

Meanwhile, those with a 5 per cent deposit, have seen their average rate climb from 3.92 per cent to 4 per cent over the same period.

Over a year, it means those with a small deposit are making total repayments of £9,480, some 69.5 per cent higher than the annual payment of £5,592 made by those with a larger deposit.

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Analysis from AmTrust also shows there are far fewer products available to those with a small deposit. Just six products are available to borrowers with a 5 per cent deposit buying a house worth £157,637.

That compares to 873 products available to those buying the same house with a 25 per cent deposit.

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

“We would like to see more options for low-deposit borrowers, with lenders utilising private mortgage insurance to help ‘average first-timers’ purchasing homes at average prices secure access to far more than at best half a dozen product options.”