Mortgages scarcer for hard-up buyers

Comparison website MoneySupermaket highlighted the struggle faced by first-time buyers and those with smaller deposits to find a mortgage, despite the recent launch of a scheme to encourage lending.

The selection of products aimed at first-time buyers has plummeted by almost a third over the last year, from 1,786 12 months ago to 1,225, the website found.

The Bank of England and the Treasury fired an £80bn “funding for lending” scheme into action at the start of this month to boost lending to households and businesses, but MoneySupermarket said there was little to show the initiative was doing much to help mortgage borrowers with smaller deposits.

The website found 318 mortgages available at 90 per cent loan-to-value (LTV) six months ago, compared with 244 today. There were 330 such deals on the market a year ago.

There are 28 mortgages on offer at 95 per cent LTV compared with 49 six months ago, although the numbers have more than doubled compared with a year ago, when there were 13.

Clare Francis, a mortgage expert at MoneySupermarket, said: “Our analysis shows the continuing difficulty facing first-time buyers and those with smaller deposits looking to find a suitable mortgage.

“Despite the launch of the funding for lending scheme which was designed to encourage further mortgage lending by the banks, there appear to be few signs that the initiative is helping those with small deposits.

“It is still early days and we won’t see any data on the impact of the initiative until the end of the year, but so far there is little to indicate that the scheme will kick-start the beleaguered mortgage market.”