It has removed all mortgages over 60 per cent loan to value from sale, with the exception of product transfers and further advances.
The temporary changes only apply to intermediary lending and also affect the BM Solutions and Scottish Widows brands. Product transfers, further advances and direct to lender applications will continue as normal.
The bank said the outbreak of Covid-19 has had a direct impact on its processing resources, in an email to its intermediaries.
This has led it to withdraw new mortgage and remortgage products across its residential range for borrowers with a deposit of less than 40 per cent.
In the email, Halifax said it wanted to continue to focus on its existing customers and support them with payment holidays to keep their breathing space on their mortgage payments.
It said the withdrawal of products was a temporary measure and it would update brokers regularly.
Lloyds Banking Group revealed it had already offered 70,000 households a mortgage payment holiday of up to three months.
It also said it would extend all mortgage offers by three months.
Mike Jones, managing director of intermediaries and specialist brands, said: “These are unprecedented times, so we need to constantly review the support we are offering to our customers.
“Being there for them when they need us is our priority and these temporary changes will enable us to focus on supporting our existing and pipeline customers in the short term.”
Other lenders hit
Family Building Society and Barclays have also withdrawn all mortgage products over 60 per cent LTV
Barclays said it had been forced to close two of its international underwriting sites over the weekend, leading it to temporarily withdraw its entire portfolio buy-to-let (BTL) range and limit application volumes.
Specialist lenders Vida Homeloans and Together have stopped accepting applications for new business.
‘Wholesale risk recalibration’
Andrew Montlake, managing director of Coreco, said the decision reflected the wholesale recalibration of risk unfolding in the mortgage market.
“Not since the Credit Crunch have we seen lenders make such a flight to quality in limiting products to 60 per cent LTV and below,” he said.
“In these unprecedented times, lenders, like a significant percentage of the world’s population, are going into lockdown.
“The decision of the Halifax is part logistics, of course, but to stop lending above 60 per cent LTV shows the seriousness with which it is taking Covid-19.
He noted that with physical valuations on hold, for many lenders 60 per cent LTV is the level they engage automatic valuation models effectively from a risk perspective and process cases without too much human intervention.
Montlake continued: “The issue will be that many remortgage customers may be forced to either stay with their existing lender or revert to more expensive standard variable rates until this crisis is over.
“The hope is that the mortgage market rebounds as fast as it is deteriorating once we come out the other side of Covid-19.”