Many borrowers wrongly assume that they will be excluded from the best mortgage rates.
The current financial climate has changed the public's perception of the mortgage market, new research from IFA Promotion has revealed. The study found that many Britons assume that they will be locked out of the best rates.
Media coverage of the financial crisis and a stricter approach from lenders has led many potential homeowners to lose hope of accessing a mortgage. Indeed, one in ten consumers believe that they need an average deposit of 40 percent to qualify for a "reasonable mortgage deal". A further 18 percent said that anything under 30 percent would lead to a rejected mortgage application.
IFA Promotion suggests that this is not the case, with several mortgage providers offering competitive rates for customers with an average deposit of 22 percent. A deposit of around 19 percent is needed for some of the five-year fixed loans currently on offer.
The research also revealed that confusion exists over how much buyers will be able to borrow. Customers put the limit on income multiples at three times their salary, however lenders usually place this figure at between 3.25 and four times average income.
David Elms, chief executive of IFA Promotion's Unbiased.co.uk, explained that "many people may be putting off looking for a mortgage simply because they think they won't be able to get a good deal".
He added: "Britain has been gripped by the recession doom and gloom and this has lead to an extremely pessimistic view of the mortgage market. In reality, whilst the lending criteria we have seen applied over the last few years are a thing of the past, there may well be options available to people looking to take out a new mortgage."
