Mortgage blog: UK sees dramatic rise in number of low-deposit mortgages

Posted 12 February 2014

The launch of the government's Help to Buy scheme has been credited with a dramatic rise in the number of low-deposit mortgages available to first-time buyers. Evidence from the UK's largest surveyor has found that there has been a steep increase in the number of high loan-to-value mortgages issued in the last year.

High loan-to-value mortgages - generally defined as those requiring a 5% or 10% deposit - are seen as a key ingredient in a buoyant property market.

Research from e.surv, the UK's largest chartered surveyor, has found there has been a sharp increase in the number of low-deposit mortgages issued by lenders in the last 12 months. The surveyor found that the number of high loan-to-value mortgages has risen by 60% in the last year, partly thanks to the government's Help to Buy initiative.

Keith Osborne, editor of, says: "Since the credit crunch it has been tough for many borrowers to secure a 90% or 95% mortgage. So, that's why the government stepped in and launched Help to Buy which effectively underwrites low deposit mortgages. Now, not only has the choice of high loan-to-value mortgages increased significantly but the number of these deals being agreed by lenders has also shot up."

Richard Sexton, director of e.surv said: "There is still a long road to travel before the mortgage market is fully recovered, but the recovery is quickening and it is now far easier to take out a mortgage with a smaller deposit saved. High loan-to-value lending should continue its recovery in the coming months, but it's important that Help to Buy remains in place to help support borrowers in building a deposit, enabling them to access better rates, and cheaper deals."

Mortgage market hits six-year high

This research comes as new figures show that the UK mortgage market grew by 20% in 2013. The data from the Bank of England reveals that there were 734,969 home loans approved during the year, up from 612,654 in 2012. There were 71,638 mortgages granted in December with a total value of £12.4bn, making it the best month for mortgage lending since January 2008.

Osborne adds: "The government's Help to Buy scheme and increasing confidence in the housing market are clearly factors that are encouraging more and more people to buy. We expect the market to continue to recover in 2014 and I wouldn't be surprised to lending rise again in 2014."

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