Lenders still want high deposits

Various groups have predicted a lift in the housing market

Mortgage lenders are still demanding high deposits from buyers as the number of deals expands.

More than two-thirds of the 1,485 mortgage deals on offer require the customer to put up a deposit of at least 25%, according to Moneyfacts.

This crept up slightly to 68% of home loans on 6 April compared with 66% a month earlier.

Some recent figures have suggested that the moribund housing market may have started to show some signs of life.

Deposit demand

The number of mortgage deals on offer has increased slightly from 1,398 to 1,485 over the last month, according to financial information service Moneyfacts.

MORTGAGE PRODUCTS AND DEPOSIT NEEDED: APRIL 09 VS MARCH 09 0% deposit - unchanged at 10 5% - unchanged at 3 10% - down from 101 to 93 15% - up from 237 to 258 20% - down from 126 to 105 25% - up from 545 to 603 40% - up from 376 to 413 Source: Moneyfacts UK mortgage market in graphics

The number of mortgages available at 90% of the value of a home has dipped, down from 101 at the start of March to 93 on 6 April. Deals with a loan-to-value rate of 85% have risen, up from 237 to 258.

David Hollingworth of London and Country Mortgages suggested that this might be because lenders were still being cautious about their lending criteria.

"The increase in deals with a 15% deposit could be due to lenders reducing the number of, or withdrawing altogether from, deals with a 10% deposit," he said.

However, he added that some mortgage providers were offering 90% mortgages again through brokers - their primary source of custom.

Interest rates on these mortgages were not as attractive, or falling in the same way, as those with a loan-to-value of 60% or 75%.

The number of deals in this range is also growing, up from 921 at the start of March to 1,016 a month later.

Survey results

The figures come after a recent set of contrasting results from house price surveys.

The Nationwide Building Society reported that property prices rose by 0.9% in March compared with the previous month. The following day, Halifax, now part of the Lloyds Banking Group, said that prices fell by 1.9% during the same period.

Recent surveys from the Royal Institution of Chartered Surveyors (Rics) have shown rising interest from prospective buyers.

Mr Hollingworth said there was anecdotal evidence that increasing numbers of potential buyers were "scoping out" the mortgage market to see what deals they could get before making offers on properties.