Page last updated at 14:08 GMT, Wednesday, 3 February 2010

Mortgage boost for first-time buyers

House keys
The number of mortgage deals was squeezed in the credit crunch

The availability of mortgages is on the rise, providing a glimmer of hope for first-time buyers, figures suggest.

The number of home loan deals on the market in the UK has jumped in the last month and the trend in lenders relaxing their criteria has continued.

The number of deals on offer is up 20% compared with the start of the year, figures from financial information service Moneyfacts show.

Some of these include deals requiring a relatively small deposit of 10%.

First-time buyers

The fall-out of the credit crunch has been felt particularly hard by first-time buyers who have needed significant savings to get on the property ladder.

We will see a bit more activity in the market this year
Ray Boulger, John Charcol mortgage brokers

Many have turned to their parents for financial assistance, although the debt risks associated with taking high loan-to-value deals has fallen.

Mortgage providers have started to become more generous with their criteria since October, when 66% of deals on offer required a deposit of at least 25%.

This figure fell to 61% at the start of January, and fell further to 58% at the start of February.

The availability of mortgages could have been affected by recent property price rises, making the deals less of a risk for lenders.


The number of deals on the market - some 1,700 - is the highest since November 2008 and suggests there is more competition in the market.

This trend could continue if lenders start to raise the cost of their variable rate deals and pick certain mortgages to promote to those who might be considering remortgaging.

"Better rates and an increase in appetite to lend could indicate that lenders are opening their doors just a little wider and trying to compete for business," said Darren Cook, of Moneyfacts.

"If standard variable rates continue to rise, many customers will be forced to find a better deal elsewhere and lenders may now be wise and gearing towards the prospect."

Ray Boulger, of mortgage broker John Charcol, said: "It is a continuation of the trend we have seen for the last three or four months, none of the cuts have been massive, with lenders cutting a few selected rates rather than all of their rates.

"The reason for the trend is due to a bit more competition in the market. We will see a bit more activity in the market this year."

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