Mortgage choice in the UK for property investors poor

Choice in the UK mortgage market is lower than ever and the cost of arrangement fees rising, according to the latest information.

With mortgage approvals at a record low in August the UK's leading consumer watchdog is warning that low interest rates are masking escalating mortgage fees and urging people to shop around.

But even so the number of products makes finding a good deal difficult. First time buyers without a sizeable deposit are left with just 36 mortgage deals on offer. And overall there are 80% fewer mortgage deals than a year ago for first-time buyers wanting to borrow over 90% of the value of a property.

To qualify for one of the best buy mortgage deals on the market, a 20% deposit is now required meaning first-timers have to have £37,000 in the bank, according to data from online mortgage company

Other figures back up the dismal picture. 'This time last year, 74.2% of the mortgages were available for borrowers with a deposit of 10% or less. Today that has dropped to 29.2%,' said Darren Cook, mortgage expert at

Mr Cook explained the big difference from last year is that mortgage lenders are no longer pricing to be competitive, but are setting their rates on the risk borrowers represent.

In the last few days a number of lenders including Northern Rock and Yorkshire BS have increased rates on their 90% LTV products.

Consumer champion Which? is warning property owners seeking to re-mortgage to watch out for the rising cost of mortgage fees. It warned that low interest rates do not always point to the best deal.

A Which? poll found 26% of homeowner picked their current mortgage mainly because of the interest rate. Only a fifth of people looked at the overall cost of the mortgage deal taking into account fees which are now happily running into four figures.

'The cost of mortgages has soared in the last couple of years, but a lot of the focus has been on what's happening with interest rates when in fact it's the total cost of the deal that's important,' said Martyn Hocking, editor of Which? Money.

'Arrangement fees are now more than £1,000 on average, and sometimes much higher, which means that an eye-catching interest rate can be misleading. If you shop around and do your homework, you could cut your mortgage costs by hundreds of pounds,' he added.