First-time buyers forced to double size of deposits
First-time buyers in London will have to double the size of their deposits as banks and building societies cut back on lending following the credit crunch.
Several mortgage lenders have increased the minimum deposit from five per cent to 10 per cent.
This means that, based on the price of an average London property - now around £350,000 - a first-time buyer would have to find a deposit of £35,000 instead of £17,500.
The biggest lender to have raised the minimum deposit is Alliance & Leicester. Last month, it reduced the normal borrowing level for all new customers from 95 per cent to 90 per cent.
A spokesman for the company said: "The decision was taken towards the end of last year. We are continually reviewing the market to ensure our products are appropriate, both for the business and for our customers."
In the past fortnight, four other lenders have reduced their maximum advance from 95 to 90 per cent: Barnsley Building Society, Britannia Building Society, Egg and Pi, the online lenders from the Prudential Group.
Another major lender, Cheltenham & Gloucester, has reduced its maximum offer to 75 per cent for borrowers who apply for loans online through brokers.
However, Britain's biggest lenders, the Halifax, Nationwide, Abbey and Barclays, still offer loans of 95 per cent, or more in some circumstances.
Among smaller lenders, the Cumberland Building Society is no longer offering 100 per cent mortgages.
Newcastle Building Society will still lend 100 per cent - but only subject to a guarantor agreeing to be responsible for the repayments.
Manchester Building Society has reduced its loan ratio from 85 to 80 per cent but only for people looking for short-term deals, who are unlikely to be first-time buyers.
Graduates and key workers who used to be able to borrow 102 per cent mortgages from Scottish Widows Bank now have to find five per cent deposits.
Scottish Widows borrowers who want more flexible mortgages will have to find 10 per cent downpayments.
