5% mortgage deposits: part of the national picture?


On the Today Programme yesterday the Prime Minister said that “95 and 90% mortgages have been a part of our national picture for many, many years.”

But is that right? Only up to a point.

The chart above shows the average deposit for a first-time buyer since the mid-1970s. As you can see, 5% deposits were indeed the norm between 1985 and 1998. However, before and since they have tended to be significantly higher. One might just as reasonably argue that, far from being a key part of the national picture, 95% mortgages may well have been a symptom of financial deregulation in the 1980s and ’90s – rather than a fundamental precept of the UK financial system.

Worth mulling over when you consider the wisdom of Help to Buy.

Figures from the CML.

UPDATE: The CML has kindly furnished me with yet more historical figures on average deposits.


These show that between 1969 and 1994 the average first-time buyer deposit from building societies never dropped much beneath 15%. It’s a different data series, but undermines the notion that 5% deposits were ever the norm – even during the heady days of the ’80s and ’90s. Though it’s worth bearing in mind that historically building societies have tended to be more cautious lenders than banks.