repayment-interestMost mortgage products require some kind of deposit in order to secure the mortgage itself. Many first-time buyers have struggled in recent times to save enough for even a 5% deposit – typically the smallest percentage possible when it comes to getting anything better than a 100% mortgage. Rising property prices and stagnant wages have meant the typical amount people have to save in order to apply for a mortgage has become ever more difficult to meet.

And now it appears as though things are set to get tougher still for anyone looking to contribute no more than a 5% deposit when searching for a mortgage. Recent months have seen some lenders reducing the number of deals available to those in this group. Needless to say, this usually includes plenty of first-time buyers who have often taken many years to build up the deposit needed, even at this level.

16% fewer deals on the market today

News regarding the interest rate drop and the rates available on many of today’s mortgages has somewhat overshadowed this element of the market. Yet in reality, 5% deposit deals have dropped by an incredible 16% in the past five months alone.

Back in March, there was a total of 270 such products on the market. In August, that has dropped to 225 – a difference of 45, shrinking the market by some distance in this area.

How does this compare with the same period last year?

Actually, those looking back to the same period in 2015 may still feel better-off than they do now. Back then, the number of 5% deposit products on the market was lower still, at just 195.

The main concern here is where things might go from here. The Help to Buy Mortgage Guarantee is still in place at the moment, but this is set to end by the time 2016 comes to a close. Could this mean there will be even fewer mortgages in this particular part of the marketplace? Only time will tell.

Tough on first-time buyers

Those who are currently paying a lot to rent a property are finding it tough to save enough to put towards a deposit on a home of their own. For many, the idea of saving just 5% of a property price is a challenge, especially when wages have failed to increase at the same pace property prices have increased.

Therefore, the gap may feel wider than ever to those who may have to start looking at 10% deposit mortgages. The good news is there are still plenty of 5% mortgages out there, but how much further the market may dwindle in this area remains to be seen.

No doubt many prospective first-time buyers still saving towards that all-important deposit will be watching closely to see whether they are able to find the best mortgage product possible from those that are still on the market. Whether that collection of mortgages will further decrease is anyone’s guess.

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