Virgin Money said it had taken the decision to temporarily cut back its lending to 85 per cent LTV to protect its service levels, after being one of the only lenders left in the market to offer high LTV deals.
Before last night’s withdrawal, the bank had raised rates on its 90 per cent LTV range by up to 0.49 per cent.
A Virgin Money spokeswoman said: “Following a strong increase in demand, we are temporarily withdrawing our 90 per cent LTV purchase, remortgage and new build products in order to protect our service to existing customers and applications.
“Our 85 per cent LTV products will continue to support customers with small deposits, and we hope to be back in the 90 per cent LTV market soon.”
HSBC is now the only big high street bank still offering 90 per cent deals through intermediaries.
But the bank is hitting daily limits on the amount of lending it will do at 90 per cent loan to value (LTV) by 8.30am, according to brokers.
The bank is operating a ‘funds booking’ system that caps availability but guarantees that some lending at this level is available each day.
HSBC announced that it may have to limit lending at 90 per cent LTV in April.
But brokers have reported that the lender is now very quickly reaching its daily limit.
Chris Sykes, consultant at Private Finance, said: “Lenders are limiting the amount of high loan-to-value mortgages they will undertake each day, with lenders like HSBC only allowing a certain number of these products to be processed each day. They open at 8am. By 8.30am they’re all gone.”
It comes after Accord also pulled out of lending at 90 per cent LTV citing overwhelming demand.
Many lenders withdrew from the market in March when the coronavirus outbreak sent the property market into lockdown.
Some banks and building societies returned as physical valuations restarted. But the choice has still been limited compared to pre-coronavirus levels.
HSBC has continued to offer 90 per cent LTV mortgages throughout the coronavirus, and said it has no plans to withdraw from the market.
The bank stopped offering 95 per cent LTV deals in April and has yet to reinstate them.
