Home buyers face deposit challenge

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Figures have offered a glimmer of hope for first-time buyers trying to raise a deposit, although those with the smallest savings still face difficulty.

The average deposit edged down from 20% to 19% of the value of a home for only the second time since January 2011, the Council of Mortgage Lenders (CML) said.

However, separate figures showed the choice of mortgages for those offering a 5% deposit has shrunk.

Moneyfacts said that there was only 54 products to choose from.

This represented just 1.88% of the whole mortgage market, the financial information service said, although choices had increased for those offering a 10% deposit.

It said that the Funding for Lending scheme had not been targeted and, as a result, had benefitted safer borrowers who could offer larger deposits.

Banks and building societies have access to cheap funds from the Bank of England through the scheme, as long as these are used in lending to homeowners and small businesses.

The government's flagship Help to Buy scheme, which will be fully operational from January, is specifically aimed at increasing the supply of low-deposit mortgages as well as new housing.

The CML said that there were 19,400 home loans advanced to first-time buyers in the UK in April, a 1% rise compared with the previous month.