Higher Mortgage Deposits Needed

Higher Mortgage Deposits Needed

Halifax is penalising all borrowers who fail to stump up 25 per cent deposits.  They will add 0.14 per cent to the product rate of borrowers taking out deals above 75 per cent loan-to-value.  But they will reward clients who put down more than 25 per cent deposits by slashing their product rates by 0.1 per cent.  Halifax has also unveiled a range of products for first-time buyers, it includes a 5.69 per cent five-year fixed rate deal at 90 per cent loan-to-value.

They have also adjusted their loan-to-value bands, previously there were two bands – 0 per cent to 90 per cent and 90 per cent to 97 per cent.  Now this will be changed to three bands – 0 per cent to 75 per cent, 75 per cent to 90 per cent and 90 per cent to 95 per cent, so the minimum deposit required has risen from 3 per cent to 5 per cent.

Our view

Other lenders have also followed suit and are increasing the minimum deposit they require to offer a mortgage.  We see this as a move back to the 50’s, 60’s and 70’s where our parents and grandparents had to work much harder and wait longer to save a deposit to buy a home.  

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