However, to continue helping first-time buyers get onto the property ladder, many of the 90 per cent LTV and above mortgages are restricted to this segment of the market potentially leaving low equity home movers and remortgagors with few options.
So this week, Mortgage Solutions is asking: Do you feel your home mover and remortgaging clients at the high LTV tiers have sufficient options?
That side of the market is definitely underserved, the issue you’ve got with remortgages especially in the current climate is the lack of products but also the down valuations that are following.
We also saw a big pull back when it came to remortgaging for debt consolidation.
A good few months ago, a lot of the lenders have moved away from that or reduced their LTVs for remortgaging for debt consolidation purposes.
It’s having an effect because clients can’t get access to cheap finance, so it’s a perfect storm for someone who’s indebted.
If people are looking to move, there are a number of lenders who offer products for existing clients with different terms. There are potential alternatives.
Fundamentally, on high LTV deals, the valuation process is the key. Down valuations already happen but because of the margins, the client can usually say ‘okay I’ll just take an 85 per cent deal’. But if they’re already on 80 per cent LTV then sometimes there’s nowhere to go.
The lack of options could affect those who otherwise would have been able to benefit from the stamp duty holiday too.
On the one hand the government is telling lenders to be conservative as there might be a crash coming, on the other they’re saying, ‘go ahead and lend because there’s a stamp duty holiday’.
There are not many options for these people at the moment unfortunately.
However, a lot of people would consider themselves lucky at the moment. They own their own home and have enjoyed a few years of rates that are likely to be better than you can get a 90 per cent mortgage for these days.
For the remortgage market their current lenders are likely to offer them a retention rate. Nationwide, for example, have a 90 per cent two-year fix for rate switches at 2.79 per cent where their new business two-year fix at 90 per cent is 3.49 per cent.
For home movers unfortunately a lot will have to stay put at the moment and wait until things settle down.
However, if they are moving to a similarly priced property, they may be able to port their current mortgage across.
Having access to the whole marketplace and good product sourcing software, I don’t think it’s the case that there aren’t enough choices for those who aren’t first-time buyers.
I did some research previously and although first-time buyers have slightly more options, there’s still choice for movers. Maybe six lenders will do home movers compared to eight that do first-time buyers only, so I don’t think there’s much difference.
For those people looking to remortgage, if they’re doing it pound for pound there are options. I did a search today and there’s 176 variables they can have. If you look hard enough there are still choices, slightly reduced but it’s still there.
It is important not to focus on the number of products available but instead, whether they fit the needs of a client or not.
If you’re going for 90 per cent as a first-time buyer, remortgagor or home mover, the fact is you’ve only got 10 per cent cash. They may not have the best rates, but it is what it is.
We will find a product to suit the client’s need at the time.