It is often said that it is grim up north, but not so if you are a home buyer with a small mortgage deposit.
Surveyor firm e.surv has noted a shift towards low deposit home loans, particularly in Yorkshire, the North West and the Midlands.
Based on mortgage applications it does surveys for, 24.6% of all loans went to low deposit borrowers in October, up from 24.2% recorded in September.
Meanwhile, 29.6% of all loans went to borrowers with large deposits, down from 30% in September.
The top regions for low home loans
Yorkshire was the area with the highest market share for small deposit borrowers, recording 33.7%, compared with just 21.1% for large deposit borrowers.
Elsewhere, the North West saw 31.2% of loans go to small deposit borrowers versus 23.3% for those with large deposits while in Northern Ireland this was 29.5% against 24.7%.
The final region to follow suit was the Midlands, where 27.1% of loans went to small deposit borrowers compared to 25.7% for those with large deposits.
It’s not such good news for Londoners, with the capital dominated by those with larger deposits.
Almost 40% all loans went to those with large deposits in London, versus just 14.7% for those with smaller cash piles.
The next biggest region for those with large deposits was the South East, where 34.7% of all loans went to this part of the market.
The return of the “supersized mortgage”
It comes as comparison website Moneyfacts found “supersized mortgages” – those requiring little or no deposit – are making a return.
These types of mortgages, typically offering a 100% loan-to-value (LTV), were seen as a cause of the 2008 financial crisis as home owners took on debts they couldn’t afford.
But now, Moneyfacts argues, many of the products work differently as they require a guarantor such as a parent or they will register a charge on someone’s property.
There are plenty of arguments for and against low deposit mortgages.
A 100% LTV would mean you put down nothing to get a mortgage, while you would need a 5% deposit for a 95% LTV or 10% for a 90% LTV loan.
A higher LTV mortgage means your upfront costs are reduced, but the interest rate tends to be higher – meaning your monthly repayments will be high – and the bank may have tough criteria as they are lending more money.
Mortgages with lower LTVs, meaning the buyer puts down a bigger deposit, typically have the lowest rates and therefore cheaper monthly repayments, but this means you will need a bigger pile of cash to start with.
Whether you are a big or small deposit borrowers, speak to your financial adviser about getting the most suitable deal for your needs.