Higher Loan to Value (LTV) mortgage products are rapidly disappearing from the mortgage market. With the fear of the second wave of coronavirus quickly becoming a reality, lenders are proactively tightening their purse strings.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Where are the mortgage products going?
Higher LTV loans are expensive products so, in order to ensure their customers receive the highest quality of service—or protect their bottom line—lenders are pulling their more costly offerings from the market. While mortgage providers are claiming these moves are being made to improve service and manage application pipeline, critics say it’s indicative of lenders being worried about the state of the market.
After restrictions were temporarily lifted over the summer, the housing market enjoyed a bit of a recovery, but with the number of cases on the rise again, up goes the risk of lending.
The first casualty of this reaction appears to be high LTV loans, with many lenders cutting their products back drastically, altogether or only offering limited-time deals. This follows on from when the virus first broke out and lenders withdrew high LTV products from their range, so it only makes sense they’d make the same decision this time around.
Let’s look at the numbers
The decline in the number of products is clear according to moneyfacts.co.uk:
- In March of this year, there were 779 90% LTV mortgage deals
- In April, that number fell to 326
- In July, less than 100 deals were available
- At the start of September, there were just 62 available and currently only 42.
The rates currently on offer from mortgage providers are higher than others on the market, as well. Most lenders hover around 3%, but some banks and building societies rates rocket up to nearly 6%.
This blow is especially tough for first-time buyers as they often struggle to bring a large deposit to the table when trying to get on the property ladder. And these figures are just for the more common 10% deposit. If you only have 5%, it will be even harder to get an affordable mortgage.
Finding mortgage help
The decline of available products highlights the need for borrowers to act quickly and take advantage of the deals on the market before it’s too late. If you’re ready to take the first step toward home-buying, get in touch with us today.
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