The contraction of lending criteria and removal of many lower deposit deals will leave many with no option but the bank of mum and dad, according to Emoov.co.uk.
Commenting on MoneyFacts research that found buyers with 10% deposits now have just 60 deals to choose from, compared to 779 in March, Naveen Jaspal, COO at Emoov.co.uk, said: “The withdrawal of these popular low deposit mortgages will have a knock-on effect across the whole of the property market as lending criteria is contracted.
“Those who could have agreed a mortgage just six months ago, with a lower credit rating or adverse credit are not unlikely to meet the new affordability criteria, meaning fewer mortgages will be agreed overall.”
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Jaspal suggested that government provisions made elsewhere should be drawn through to address these issues.
He said: “Surprisingly, the Bank of England base rate at 0.01% is not currently being reflected via mortgage interest rate and I would urge the Chancellor to ask the banks to pass this on to the consumer.
“Anecdotally, we are hearing that first-time buyers are either turning to the bank of mum and dad or looking to take out unsecured loans to boost their hard-saved deposits, which is concerning in the current climate.”
In addition, Jaspal suggested that the stamp duty holiday should be extended as part of efforts to create sustainable market recovery.
He said: “Stamp duty savings can and should be leveraged to make up for any shortfall.
“We would hope that the Chancellor makes the decision to extend the stamp duty holiday beyond Q2 2021 to ensure the market remains as buoyant as possible.”
He added: “Mortgage brokers are seeing an increasingly large number of surveys being returned tens of thousands of pounds lower than expected, due to down valuations and desktop surveys.
“These conservative estimates will have ongoing financial and physical implications for both sellers and buyers.
“With these mortgage products disappearing from the market, the smallest deposit that buyers could get away with is 85%, meaning that for some, the only option left is to raid the bank of mum and dad.”