Let’s be frank – high LTV lending has not been top of the lending charts for many in the mortgage community over the past 12 months.
Moneyfacts data suggests the number of 90 per cent LTV products has increased month-on-month by 72 to 160 in January, as a number of lenders launched back into the sector over the course of the last few weeks.
But greater product provision is just one part of the purchase equation, particularly for first-time buyers.
According to Halifax the average UK house price is now over £253,000 – up from £241,000 in July last year.
You don’t need to be a genius to work out that securing a 10 per cent deposit is going to cost you the best part of £25,000, plus average two-year fixed-rate mortgages at 90 per cent have risen from 1.99 per cent in July last year to 2.52 per cent now.
Greater deposit requirements and higher monthly payments are going to put further pressure on those trying to get on the housing ladder for the first time.
However, we can’t deny there is greater product choice now. Using the Halifax data, first-timers currently have their pick of 95 products of varying lengths.
There would be 34 options if you were just looking for a two-year fixed-rate product.
This good news is tempered somewhat by the continued dearth of options for those who only have a five per cent deposit – traditionally, the go-to deposit choice for first-timers.
At the moment there are only six product options available. So you can see why it’s pretty much 10 per cent deposit or nothing.
Wait it out
Many first-timers may be choosing to wait it out particularly if house prices do fall as many organisations and institutions suggest they will during 2021.
However, and this is something advisers will no doubt be telling clients, house price falls of single digits are unlikely to make a huge difference to them.
Which leads us back to high LTV product provision. What else can lenders do at 90 per cent and might they be willing to look at 95 per cent LTV deals?
Perhaps by using private mortgage insurance they might. After all, the government scheme to support first-timers doesn’t look like appearing anytime soon.
This was always likely to be a slow march back to normality. Lenders look like they are more willing to embark on that trek to 90 per cent in 2021, but the 95 per cent LTV peak still looks much further way.
For now, those borrowers who would like to buy with a five per cent deposit may have to wait until after the stamp duty holiday has finished, when any significant drop off in purchase activity may be filled by lenders more willing to lend to those with smaller deposits in order to secure business.
Until then, a slow move back up the mountain is I suppose, better than staying at base camp.