Mortgage products slowly start to return

The number of residential mortgages available is slowly increasing, but still the market is dominated by deals for customers with more than a 25% deposit, says Moneyfacts.co.uk.

On 1 April 2009 the number of mortgages available hit rock bottom at just 1,209, a 90% drop from the peak of 11,951 products available in July 2007. Today there are 1,392 products available.

Michelle Slade, spokesperson for Moneyfacts.co.uk commented: "Lenders are slowly taking small steps back into the market, albeit with a very cautious approach.

"The market remains dominated by deals for those borrowers with at least a 25% deposit as lenders look to cherry pick the best customers.

"Borrowers with just a 10% deposit are finally seeing increased options, but they are still paying a very heavy price for their lack of equity

"The best deal on offer for a borrower with just a 10% deposit is 2.00% higher than that available to those with a 40% deposit, adding £170 per month to the cost of a £150,000 mortgage.

"Despite the cost of funding continuing to fall, lenders continue to be slow to react.

"The lack of any real competition in the market is still having a huge impact. None of the big lenders seem to want to be the first to cut rates as they are worried they will be swamped with applications.

"Lenders may be open for business, but we need more bold moves from some of the bigger players before borrowers start to see any real benefit."