Mortgage deposits up 43% in year

Mortgage borrowers are being hit by a sharp increase in the deposits required to secure best-buy mortgage deals.

While the cost of fixed-rate borrowing has started to recede in recent weeks, research from mform.co.uk reveals homebuyers are being forced to find more cash by way of a deposit.

The research finds the average buyers now needs a deposit of £37,119 to qualify for the most competitive mortgage deals, - a price which has soared by 43 per cent from last year

Just one year ago the level was £20,980, the online mortgage company finds.

"First-time buyers or those who have entered the property market recently will struggle to qualify for the most competitive rates," explains Francis Ghiloni, mform's marketing and business development director.

"That makes it even more important for borrowers to focus on the true cost of their loan including all fees and not to simply focus on rates.

"There are still competitive deals and lenders willing to offer 95 per cent loans but the most competitive offers are being restricted to people with big deposits or substantial equity."

mform finds discovered that buyers in the north-east require the smallest deposit, at £27,703, while those in London require the largest at £71,616.

"Availability of mortgage deals remains the biggest issue for borrowers who do not have equity in their homes," explained Mr Ghiloni.

"Those who have benefited from the decade-long housing boom can still qualify for the most competitive rates."

Chris O'Toole