Leeds Building Society Launches Lowest Ever 2 Year Deal
05 October 2011
The Leeds Building has just launched a new 1.99% fixed rate mortgage deal, the lowest ever 2-year deal the firm has offered in its 136 year history. No one can deny that this is a really good deal, but when you look a little deeper you can see why it is highly unlikely to save the housing market in Leeds from its current stagnation.
The stagnation in Leeds, -- like the rest of the UK except for London and surrounding areas -- is caused by the fact that the majority of first time buyers can't get onto the housing ladder. Despite the record low UK interest rates and the supposed higher affordability caused by this and the two year lull in house price growth, still first time buyers are struggling.
Firstly because banks are only lending to those with near-immaculate credit ratings, and secondly because many of those who have good enough credit ratings to get loans, cannot raise the 10% minimum deposit needed to get an affordable deal rate -- let alone the 15-20 percent needed to get the really good deals.
According to the latest Land Registry data the average house price in Leeds is £129,617, so even a 10% deposit is almost £13,000 so you can see the difficulty. For the new 1.99% 2 year deal from Leeds, buyers need to have a 25% minimum deposit, which is £32,405 to buy an average priced home in Leeds.
Undoubtedly this is a good deal, and it may well stir increased demand from existing-owner buyers who can raise the deposit, but it is unlikely to make it any easier for the majority of first time buyers struggling to get onto the property ladder.