Lenders ease mortgage rationing

Mortgage rationing has become less severe in the past month

Lenders have been making it slightly easier for borrowers to take out a mortgage, according to the financial information service Moneyfacts.

The number of mortgages requiring a minimum 15% deposit has risen from 189 in the past month to 226, the highest number for more than a year.

At the same time the number of mortgages requiring a 20% down-payment has fallen, from 136 to 117.

However 66% of mortgages still need at least a 25% deposit.

Darren Cook of Moneyfacts said the easing of mortgage rationing was particularly good news for first-time buyers.

"It is encouraging to see that maximum 85% loan to value, or 15% deposit, requirements have increased in numbers this month," said Darren Cook of Moneyfacts.

"[This] might be an indication that some mortgage providers have kept an eye on the housing prices, regained some confidence and realigned their outlook towards risk," he added.

Ray Boulger at mortgage brokers John Charcol said the change was a reflection of increased competition between lenders.

"Northern Rock has come back into the market in the past three weeks with some increasingly aggressive pricing," he said.

"They have increased the competition for lower loan-to-value (LTV) deals, so other lenders have been pushed towards lending more at higher LTVs," he added.

The average first-time buyer still needs to put down a 25% deposit according to recent figures from the Council of Mortgage lenders.

But with house prices rising in the past few months, lenders have lost some of their fear of losing ever larger sums of their money if their borrowers default.