More help for homebuyers

The choice of available 5% mortgages will be expanding soon, but what does that mean for you? Vicky Shaw investigates…

Ultra-low deposit mortgage deals will soon be making a comeback. Several high street giants including Barclays, HSBC UK and NatWest are backing a new UK Government mortgage guarantee scheme, which should significantly boost the choice of 5% deposit deals this spring.

The selection of 5% deposit mortgages shrank dramatically as providers became concerned about ‘riskier’ lending during the pandemic.

There were just five options remaining at the start of March 2021 – compared with 391 in March 2020 – according to Moneyfacts.co. uk.

In further promising signs for first-time buyers – Accord Mortgages, an intermediary arm of Yorkshire Building Society – recently launched 5% deposit loans, which are not part of the new mortgage guarantee scheme.

To give aspiring first-time buyers an indication of exactly how much they might need to save to reach a 5% deposit, Barclays Mortgages has made some calculations, based on the average house prices paid across the country last year.

WHAT DOES A 5% DEPOSIT LOOK LIKE?

Of course, a 5% deposit will not be the same in every part of the country – in fact they vary hugely.

According to Barclays’ calculations, a 5% deposit in Northern Ireland might be

around £7,391; around £8,784 in North England; £8,985 in Scotland; £8,999 in Wales; £9,250 in Yorkshire and the Humber, and £9,805 in

North West England.

Meanwhile in the East Midlands, you could be looking at around £10,599, and £10,710 in the West Midlands.

However, in South West England it rises to £12,744; in East Anglia to £14,174; to £18,280 in South East England, with London coming in at £29,270.

The tough economy has meant saving for a house deposit has been particularly hard over the past year. There’s also been evidence that the financial fallout from the coronavirus crisis has hit younger adults – who are often aspiring first-time buyers – particularly hard.