Mortgage blog: UK mortgage market divided into the ‘haves’ and ‘have nots’

Posted 12 July 2013

Are you a mortgage ‘have' or a ‘have not'? The Independent recently reported that "the UK's property market has never been so deeply divided" as the ‘haves' snap up some of the cheapest mortgage deals ever seen while the ‘have nots' struggle as lenders continue to rein in lending to first-time buyers and those with a small deposit.

Here, we look at the huge divide in the UK mortgage market between record-breaking deals and the struggles facing young people and renters.

‘Haves' benefiting from record low mortgage rates

For some people, the mortgage market has never been so good. "Some of the deals that are available to borrowers with a large deposit or equity in their homes are astonishing," says Keith Osborne, editor of "You can now get a two-year fixed rate at below 1.7% and a five-year deal at under 2.5%. These are unprecedented deals and those borrowers who are eligible are benefiting with rock bottom repayments."

Record low deals are attracting more customers to the major lenders. The number of approved mortgages rose by nearly a quarter in the 12 months to May according to new figures from the British Bankers Association while remortgages rose 17% on the year.

So, if you're lucky enough to have a large deposit or a lot of equity in your home, times have never been better. For first time buyers and those struggling to save the large deposit needed, it is a very different picture, as we see next.

‘Have nots' struggling with lack of mortgage availability and cost of homes

First-time buyers and borrowers with a small deposit are continuing to find it tough to get a mortgage. The Independent reports that low deposit deals ‘are still very thin on the ground and many would-be buyers simply cannot cover the 10% deposits that most lenders require.'

This has been backed up by figures from the charity Shelter. They have found that a couple on an average income starting a family in their twenties would have to save up for 12 years before they could afford their first home.

"While a few lenders have been offering some 90% and 95% deals, the truth is that a lot of first-time buyers simply can't afford to raise a large deposit while simultaneously paying rising rents," added Mr Osborne from "Until such a time as low deposit deals are widely available the ‘have nots' are going to continue to struggle."

And, it's not just new buyers that are struggling. Homeowners who are unable to remortgage - perhaps due to credit issues or the fact that they have little or no equity - are facing a ‘debt timebomb' according to the Bank of England. The Bank has recently predicted that nearly one in 10 mortgage borrowers would have to work longer hours, or cut back on essentials if rates were to rise by just one percentage point.

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