You are here: Home - News -

Blow to first-time buyers as low deposit mortgages all but disappear

by:
  • 03/09/2020
  • 0
Blow to first-time buyers as low deposit mortgages all but disappear
Low deposit mortgage deals have plunged in the last six months as lenders tightened their criteria amid market volatility due to the coronavirus pandemic.

 

Borrowers with a 10 per cent deposit had a choice of 779 mortgage deals at 90 per cent loan-to-value (LTV) in March.

Just a month later in April, the deals had more than halved to 326 and by July, less than 100 were available.

And at the start of September, these borrowers have a choice of just 62, according to financial data site Moneyfacts.

For prospective homebuyers with just a five per cent deposit, at the start of March there were 391 mortgage deals at 95 per cent LTV. Six months later, this figure had plummeted to just 14.

 

Lower LTVs hit

At the other end of the scale, deals in the higher deposit, lower LTV bracket reduced, but not to the same extent.

The Moneyfacts data revealed there were 604 products available to borrowers in March and by September, this had decreased to 443.

Yesterday, HSBC announced a temporary withdrawal of its 90 per cent LTV mortgages for new customers after experiencing a surge in demand as other lenders pulled their low deposit deals in recent weeks.

Despite the chancellor’s stamp duty cut, first-time buyers are still facing hurdles getting onto the property ladder as lenders play safe amid the uncertainty created by the coronavirus crisis.

Rachel Springall, spokeswoman at Moneyfacts, said: “It will be hugely frustrating for first-time buyers to see further contraction in the higher loan-to-value mortgage sector.

“Product availability has plummeted since March, where there were hundreds of deals to choose form, there are now very few.

“Those who had expected to get a foot onto the property ladder may now hold their plans, particularly if they only have a five per cent deposit. This market movement highlights how vital it is for borrowers to act quickly to take advantage of a mortgage deal right now.”

 

There are 0 Comment(s)

You may also be interested in

Read previous post:
Number of FTBs drops to seven-year low as prices increase – Halifax

The first six months of 2020 saw 116,843 first-time buyers, a 29 per cent drop on the 164,800 seen in...

Close