Mortgages for buyers with small deposits drop by 97%

THE number of different mortgages available to people with only a 10 per cent deposit has plunged 97 per cent during the past two-and-a-half years, research out today shows.

There are currently 102 mortgages to choose from for people borrowing up to 90 per cent of their home's value, against 3,148 at the start of 2007, according to moneysupermarket.com. At the same time, the average interest on the loans, typically taken out by first-time buyers, has risen slightly, despite steep falls in the Bank of England base rate.

In January 2007, the base rate was at 5 per cent and people with a 10 per cent deposit paid an average rate of 6.2 per cent. Today the average interest on such a loan is 6.23 per cent, despite the base rate standing at 0.5 per cent.

This has increased the average rate these borrowers pay above the base rate to 5.73 per cent, compared with a differential of only 1.2 per cent in January.

Louise Cuming, the head of mortgages at moneysupermarket.com, said:

"Providers are keeping first-time buyers out of the market which simply exacerbates market stagnation."