Here's the good news: it's easier to get a 90% mortgage today than at any time since the credit crunch began. And here's the bad news: interest rates (from 4.49%) on 90% loans are steep, and if it's a 95% loan you want, the rate can spiral to 7%, equal to 14 times the Bank of England base rate.
First Direct, already the cheapest lender for people with big deposits, this week introduced the best-value mortgage for anyone with just 15% to put down. It is offering a lifetime tracker at 3.49% over base rate, currently 0.5%, giving an initial rate of 3.99%, plus a fee of £499.
Analysis by Moneyexpert.com this week found 147 fixed-rate mortgages available for those wishing to borrow at least 90% of a property's value, an 88% increase on this time last year, and said there is a "growing inclination" among lenders to offer higher loan-to-values.
But don't cheer too much. A year ago, the average loan-to-value (LTV) on a fixed-rate mortgage was 75.7%, but today it is 76.8%. In other words, if you want to buy the average-priced UK property at £163,481 (Nationwide index, January 2010), you'll need a deposit of £39,927 to access the best mortgage deals.
Such a sum will remain out of reach for most, which may explain why the first-time buyer market remains moribund. In January, mortgage lending hit an eight-year low of £8.1bn, from £18bn in January 2007. The end of stamp duty relief at the start of the year plus the bad weather evidently deterred buyers. But the English Housing Survey, an in-depth government survey of attitudes and behaviour, suggests other forces are at work.
The survey, published on Tuesday, found owner-occupation is declining year in, year out. It peaked in 2003 at 70.1% and has since fallen to 67.9% of Britain's housing stock. Instead, younger adults priced out of the market are now more likely to rent from buy-to-let landlords. The survey found 3.1 million people in England rented privately during 2008-09, a 50% increase on the 2.1 million in 2001.
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