Almost half of homebuyers have less than 20% deposit
New research from a building society has found that demand for high loan-to-value mortgages remains strong with the average homebuyer in the last year having a deposit of 29%. The survey from the Nottingham Building Society has revealed that almost half of people who bought a property in the last 12 months or plan to do so soon had a deposit of less than 20%.
Research from the Nottingham has found that thousands of homebuyers still need a high loan-to-value mortgage when it comes to buying a property. The average deposit last year was 29% although 48% had a deposit of less than 20% and just over a quarter (27%) of buyers completing had a deposit of less than 10% of their house price.
Demand for low-deposit mortgages therefore remains strong, and the choice of 90% and 95% loan-to-value mortgage deals has increased from 325 in November 11 to around 605 now.
Ian Gibbons, Nottingham Mortgage Services senior mortgage broking manager, says: “Homebuyers are demonstrating their commitment for a deposit as highlighted by the average 29% they are able to put down.
“Many will be using the equity they have built up in their home but it is also clear that people saving for deposits are succeeding in the market as well with nearly half of those putting down 20% or less. Securing a deposit is of course only the first step as buyers then need mortgages and prices can vary considerably depending on the LTV which is why searching the market is so important.”
The study also found that cash buyers are still a force in the market – around one in eight people (12%) who have bought in the past year or plan to buy in the next two years say they do not need to borrow.
Mortgage brokers are the most popular way of getting a mortgage
The research from the Nottingham also found that, of the borrowers who have taken out a mortgage in the last three years, mortgage brokers were the most popular way of securing a home loan.
Over the past year more customers are turning to intermediaries, with half of 25- to 34-year-olds using brokers to source their mortgage, a figure that drops to 40% of those aged 35 to 44, 28% who are 45 to 54 and 33% aged 55 to 64.
Gibbons adds: “There is undoubted growing use of brokers. Seeking an independent view on the best deal available to a customer is a very sensible approach.
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