According to a Mortgage Solutions poll of 81 respondents, 26% said they did not anticipate the market would move to fill the void created by the end of Help to Buy 2, which is due to expire at the end of 2016.
Earlier this month, Santander announced it would begin to lend on 95% LTV mortgages without the assistance of the mortgage guarantee scheme.
Paul Shearman, proposition manager for mortgages, protection and general insurance at Openwork, said he expected more lenders to announce support for borrowers with smaller deposits.
“With both Santander and Nationwide recently announcing their commitment to 95% LTV lending outside of the government’s Help to Buy initiative, it’s a sure sign that this important part of the market will continue to benefit from lender support.
“The Help to Buy guarantee scheme was just what was needed at the time but lenders are now in a much better position to offer high LTV lending on their own without the need for the government guarantee. As a result we will continue to see more lenders offer new products, especially designed for first-time buyers,” Shearman added.
Sesame Bankhall’s senior product and communications manager Rob McCoy said it was important not to lose sight of the regional building societies that have been offering high LTV products for a number of years.
“They might not be headline-grabbing fixed rates but they are out there,” he explained.
“Yes more lenders will be in this space but it is likely that the products will come with greater risk controls and priced accordingly compared to lower LTV products. Also I would expect to see the lenders who do enter that market will have different credit score cards for these types of products.”
Toni Smith, First Complete sales operations director, added: “I think Santander will be the first of many with growing competition in the high LTV and first-time buyer sectors. With the stricter affordability requirements in place since the MMR, lenders will only be lending to people who can clearly afford the mortgage. We are in a robust market now with many new entrants so it is also likely to be an area that both niche and challenger lenders will look at.”
