{"id":28232,"date":"2025-04-17T18:51:11","date_gmt":"2025-04-17T18:51:11","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/28232\/"},"modified":"2025-04-17T18:51:11","modified_gmt":"2025-04-17T18:51:11","slug":"surge-in-low-deposit-mortgages-sparks-warnings-to-approach-deals-with-caution-personal-finance-finance","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/28232\/","title":{"rendered":"Surge in low deposit mortgages sparks warnings to approach deals \u2018with caution\u2019 | Personal Finance | Finance"},"content":{"rendered":"

Homebuyers are urged to approach low-deposit mortgages \u201cwith caution\u201d as 5% and 10% deals surge to levels not seen since the 2008 financial crash. New data from Moneyfacts showed 442 mortgage<\/a> offers for a 5% deposit were available in April, up from 204 in 2023. Mortgage<\/a> deals for those offering a 10% deposit have also increased, hitting 845 products, up from 684 two years before.<\/p>\n

Critics argue that these offers present a double-edged sword. While they provide a helpful route for first-time buyers into the property<\/a> market, the downsides \u201ccan be significant\u201d. Dave Seed, managing director at Qube Residential, said: \u201cAs seen in 2008, low-deposit mortgages inherently carry higher risks and leave borrowers exposed. With minimal upfront equity, borrowers are more vulnerable to negative equity if property prices decline.\u201d<\/p>\n

He noted that the risk is amplified by the likelihood of higher default rates among borrowers with limited financial buffers.<\/p>\n

On average, low-deposit borrowers have a mortgage<\/a> rate of well over 5%, while borrowers who pay a 40% deposit typically pay under 5%.<\/p>\n

Fiona Peake, mortgages expert at Ocean Finance<\/a>, said: \u201cLow-deposit mortgages tend to come with higher interest rates<\/a> because the lender is taking on more risk. When rates are already a stretch for many households, it could put extra pressure on budgets.\u201d<\/p>\n

Debt support charity Money Wellness has seen a stark rise in people seeking help for \u201cunaffordable\u201d mortgage<\/a> payment increases.<\/p>\n

Sebrina McCullough, the charity\u2019s director of external relations, said those reaching out have seen average payments jump from \u00a3728 in 2023\/24 to \u00a31,013 in 2024\/25 – a staggering 39.1% increase.<\/p>\n

She added: \u201cThat kind of leap is unaffordable for many households, pushing some into serious financial difficulty.\u201d<\/p>\n

There are also growing concerns about the potential for a house price bubble, with more people affording larger mortgages fuelling inflated property prices that aren\u2019t supported by the economy.<\/p>\n

Mr Seed said: \u201cThe influx of low deposit mortgages inflating house prices [can] create a bubble that could eventually burst.\u201d<\/p>\n

He added: \u201cUltimately, low-deposit mortgages improve access to homeownership, but they must be approached with caution as they could reintroduce the seismic economic risk that once shook the global economy.\u201d<\/p>\n

Supporters of the deals have described them as a \u201creal boost\u201d for first-time buyers who\u2019ve been priced out of the market.<\/p>\n

Babek Ismayil, CEO and founder of homebuying platform OneDome<\/a> said: \u201cWith house prices still sky-high, being able to buy with just a 5% or 10% deposit makes a huge difference \u2014 and gives more people a fighting chance of owning their own home.\u201d<\/p>\n

However, he warned the deals call for \u201creal caution\u201d, adding: \u201cThey need to be offered responsibly, with affordability and long-term stability front of mind.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Homebuyers are urged to approach low-deposit mortgages \u201cwith caution\u201d as 5% and 10% deals surge to levels not…\n","protected":false},"author":2,"featured_media":28233,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,2825,1700,16995,16993,510,1269,6791,478,16997,16999,16998,16996,16994,3713,2516,16,15],"class_list":{"0":"post-28232","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-debt","10":"tag-economy","11":"tag-financial-risk","12":"tag-first-time-buyer","13":"tag-first-time-buyers","14":"tag-house-prices","15":"tag-housing-market","16":"tag-interest-rates","17":"tag-low-deposit-mortgage","18":"tag-low-deposit-mortgage-lates","19":"tag-low-deposit-mortgage-news","20":"tag-low-deposit-mortgage-risk","21":"tag-low-deposit-mortgages","22":"tag-mortgage","23":"tag-property","24":"tag-uk","25":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114354814597287319","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/28232","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=28232"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/28232\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/28233"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=28232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=28232"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=28232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}