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UK Mortgage Market Set for Major Change

Housing-Market / Mortgages Mar 05, 2013 - 12:45 PM GMT

By: MoneyFacts


Moneyfacts research reveals that the mortgage market has literally turned on its head in the last five years.

In 2008, everyone wanted to sell to first-time buyers (FTBs); out of 2,096 mortgage products, 957 were aimed at anyone with at least a 10% deposit and only 24 mortgages sought those with a large deposit. 

Five years on, FTB choice has dropped by around two thirds, whilst in contrast, there are over 500 mortgages designed solely for those with a 40% deposit. 

Sylvia Waycot, Editor at, said:

“During the last five years the UK mortgage market has changed beyond recognition.

“We have gone from the heady days of 2008, when mass sub-prime lending was acceptable, to the historic fall in Bank of England base rate in 2009.

“We have witnessed the contraction in lending due to provider risk aversion and we have seen variable rates cease to be desirable whilst fixed rates became the new consumer darling.

“We have watched interest-only mortgages fall from grace and the FTB market stagnate as deposit demands became unrealistic.

“The latest significant change is the Government’s Funding for Leading Scheme, which aims to put everything back on track – but only time will tell if this works out as planned.

“After years of being downtrodden, the mortgage customer may at last be back in the driving seat. The 39 lenders who have signed up to the Government’s Funding for Lending Scheme face being penalised if their borrowing books do not increase.

“The high deposit market is saturated with offers so if lenders want to lend, they have little choice other than re-opening shop to the FTBs they turned their backs on five years ago.

“We are already seeing the forward-thinking lenders enter the markets with innovative products to help FTBs get onto the housing ladder. It looks as though we are about to enter yet another period of change within the mortgage market, and at last it might be for the better.” - The Money Search Engine is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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