Lower deposits 'mean higher mortgage rates'

Date:Thursday 14th May 2009
Author: Max Freedman

Consumers who are not able to put down a sizable deposit on a property are being charged significantly higher mortgage rates, it has been claimed.

According to figures produced by moneysupermarket.com, it can be 30 per cent more expensive to take out a mortgage with a loan-to-value (LTV) of 90 per cent compared with a LTV of 75 per cent.

In addition, while only six per cent of mortgages are available to property purchasers with deposits of ten per cent, 17 per cent of moneysupermarket.com mortgage channel users are seeking products in this range.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "Despite falling house prices, finding a large deposit is no mean feat - we're generally talking about many thousands of pounds."

She added that, not only will people with smaller deposits find it harder to get a mortgage, but they are also likely to be charged a higher rate.

Earlier this month, David Amstell, founder of Briffy.com, claimed that first-time buyers are struggling to get hold of the large deposits currently required by banks.