Loan-to-value average falls further

The best mortgage deals on the UK housing market are being restricted to those with large deposits.

Maximum loan-to-values (LTVs) have fallen amid the credit crunch – denting the hopes of first-time buyers or homeowners with little equity behind them.

Analysis from online mortgage firm mform.co.uk reveals the average best buy LTV in May 2007 was 93 per cent for two-year fixes.

The LTV average on the top ten best buys is now 85 per cent for two-year fixed rate mortgages.

Francis Ghiloni, mform business development director, said: "The credit crunch has not only seen mortgage rates and fees rise, it has also resulted in many lenders reducing their maximum LTVs.

"All aspects of the mortgage market have been affected and it has never been more important for people to search for the best deal for them than now."

He added, as mortgage fees are also rising: "The dominant issue in the mortgage market remains the availability of loans but borrowers have to focus on the true cost of their mortgage above all else."

On average the LTV on best buy mortgages has fallen in the last year from 91 per cent to 87.6 per cent.

With an average property now worth around £185,000, according the Land Registry, instead of an average £16,650 deposit, buyers now need £22,940.

For discounted rates average best buy LTVS are down four per cent to 84 per cent while for five-year and three-year fixes they have fallen two per cent to 87 per cent and 88 per cent respectively.

Daniel Barnes