Mortgage payments are a step towards homeownership, but getting on the property ladder in the first place has seemingly proved more difficult in recent times. Those who require a mortgage to purchase a home will often need to put down a deposit – a lump sum to secure the property. The rest of the sale price of the home is then paid off over a number of years through a mortgage arrangement.
“We have precedent on this, as it took years to get 95 percent products back after the financial crisis – at volume and at scale.
“Regarding where we stand right now, the consensus of lenders is that there are two really huge unknowns: how many people will end up unemployed, and what ramifications that level of unemployment will have on house prices.
“They are the two single largest things that drive risk. And they drive lenders’ appetites to lend at high loan-to-value ratios.”
It is issues such as these which will make it more and more difficult for people to gather together the money required to place a deposit down on a house.
“As long as that demand exists and lending is available, then buyers can rest in the knowledge prices will look after themselves. There shouldn’t be significant rises or falls.”
However, while demand is clearly present, the future of the housing market is still uncertain.
Mr Hayes concluded: “It is a bit of a chicken and egg situation. If lenders get scared and decide not to lend money to cohorts of customers looking for 90 and 95 percent mortgages, then in turn they could remove demand from the market.
“This could potentially reduce house prices. Demand is only real demand when people can get the mortgage.”
Mr Hayes added that there are several options buyers can set into motion when looking to secure a deposit at this time.
These include consulting a mortgage broker, and analysing the price points in their area of purchase.
The Money Advice Service states it is important to consider that a type of mortgage a person selects can have an effect on their interest over time.
The mortgages with the best interest rates are therefore only available when people accrue a larger deposit.