Lenders Warned As 95% Mortgages Return

Low-deposit mortgage deals are back on offer for first-time buyers after the financial crisis left many struggling to get on the property ladder.
But there is concern that a surge in 95% loans could lead to lending spiralling out of control as it did before the crash.
Bernard Clarke, from the Council of Mortgage Lenders, says credit checks will be stringent to make sure that does not happen.
“The safety nets need to work on both sides, really,” he said.
“Lenders still need to be very cautious in assessing the ability of a borrower to repay a loan and borrowers need to think long and hard about taking on such a long-term commitment as a 25-year mortgage.”
Francesca Loftus and James Roberts struggled to save enough for the large deposit they needed.
James, 24, said: “We wanted to be able to put money in our own pot and save something so we moved home.
“We thought we’d saved enough and then we went to see a financial adviser and he said we would need to save more.”
They will get the keys to their new-build in Felixstowe in a matter of weeks but they only managed to buy with the help of the Government and housebuilder-backed FirstBuy scheme.
New mortgages on offer should help other first-time buyers.
An online search on one price comparison website found 71 deals offering 95% loans.
It means those buying the average home worth £160,000 will need as little as an £8,000 deposit.
At Hopkins Homes in Suffolk the new mortgages and schemes such as FirstBuy have helped boost inquiries.
“Without first-time buyers it really does create a slowdown in a market. It makes it stagnate,” said Lee Barnard, the company’s sales and marketing director.
“We need to get first-time buyers onto the property ladder, which will enable people to move on and secure larger properties.”
The downside is that many of the low-deposit loans on offer come with a higher interest rate and only around a third are approved for first-time buyers.
Philip Bullman, of the National Association of Estate Agents, says the problem is finding a way of getting the housing market flowing again and the new mortgages are a step in the right direction.
But what will not help, he says, is the stamp duty holiday coming to an end for first-time buyers on March 24.
“It’s an anti-inspirational tax. It’s another blow to first time buyers.”
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