The value of property has been affected by the credit crunch with an estimated 95.1% of house prices falling in April 2008. Banks are unwilling to provide as high mortgages as they have been doing. Therefore potential buyers have less available money, and sellers have to accept a lower price, meaning house prices have been falling. The high number of different mortgage offerings which were once available from the numerous UK lenders has also been reduced.

As the credit crunch accelerates the need for a mortgage deposit has increased with banks offering the best deals to customers who have deposits of 10% or more.

When buying a home a deposit can be beneficial in two ways:

• Demonstrates financial commitment to the lender
• Reduces the amount you need to borrow, which can result in cheaper borrowing rates

A higher lending fee can be charged when you are seeking to borrow more than 75% of the home’s value. The UKs biggest mortgage lender HBOS, who has 20% of mortgage market), has increased the interest rates for borrowers who have less than a 25% deposit.