Homeowners have been hit by three pieces of bad news this week. The latest figures show mortgage lending is down 65 per cent on last year, first-time buyers will need on average £40,000 deposit and a quarter of those who fall into owners of ‘sub-prime’ mortgages are falling into arrears.

The average price house is now £180,781 however to secure a mortgage of this value you will be looking to put around £37,000 as a deposit – nearly double the amount required last year.

If you were earning Britain’s average salary of £23,750 you would need to save for more than two years to have saved enough of your take-home pay.

Thirdly those with poor credit histories who are given higher-rate loans to balance the risk the lenders take have been hit with record high rates now set at 23.31 per cent. While many are failing to keep up with the enormous repayments on these sub-prime mortgages, these higher rates are only going to hit them harder causing more and more repossessions in this sub-prime market.
Those who have sub-prime mortgages are not only suffering from sky high rates but when they come to remortgage they are finding they are unable to as the many mortgage providers who were issuing mortgages have now pulled out from the market or are no longer offering these higher risk mortgages. Many are now stuck trying to make the repayments with their current lender who is charging them a much higher rate than last year resulting in many ending up in arrears.

Figures revealed by the British Banking Association showed there have been 22,448 new loans for those moving home approved last month, this figure is 65 per cent less than in July last year. This evidence suggest mortgage lenders are still treading very cautiously and only lending to lower risk customers, those who can comfortably make the repayments.

Although this isn’t the news homeowners want to hear mortgage lenders are reducing their rates constantly, fixed rate mortgages are now being offered at a rate similar to this time last year albeit with higher fees attached however they market is now in recovery mode and mortgage lenders and starting to return to the market.

It is worth running a remortgage quote to see what lenders are able to offer you to ensure you are getting the best deal for you, especially as the market has changed so much recently and you could well have been stuck on a higher rate if you remortgaged during the credit crunch.