Larger deposits required this year to secure mortgage deals

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by Kay Murchie

The British Bankers’ Association (BBA) said a record low for mortgage approvals was reported in December as the credit squeeze continues to have an impact.

The Royal Institute of Chartered Surveyors (Rics) is predicting that demand for mortgages is likely to remain sluggish in the next few months so those looking to purchase their first property this year will need a large deposit in order to secure a competitive mortgage deal.

Oliver Gilmartin of Rics said the current economic climate means that first-time buyers are going to need money behind them or may be forced to ask their parents for financial help.

Recent research appears to support predictions from Rics which has indicated that loan-to-value ratios are dropping.

Prospective buyers are making a compromise according to Helen Adams of first-time buyer website, Firstrungnow.com. This means considering a home that you can afford, in a location that is affordable. This may not be ideal but would be something that you can improve and it will stand you in good stead as an investment.

Furthermore, when purchasing furniture for a new home, research by Standard Life Bank shows that the majority of first-time buyers furnish their homes with used furniture from relatives. Instead of designer shops, look for inexpensive versions of high-style items at eBay, B&Q, the local market or Ikea.