In August there was a surge of activity in the high loan-to-value (LTV) mortgage sector, with lenders launching more products aimed at those with smaller deposits, which should provide some much-needed relief for first-time buyers.
Moneyfacts.co.uk research reveals that last month 36 new mortgage deals in the 85% LTV tiers and above were launched, in a complete turnaround from the drop of 26 products the previous month.
In a breakdown of individual tiers, there were 16 more products in the 85% LTV tier (11 fixed and five variable), 15 more in the 90% LTV tier (nine fixed and six variable) and five more in the 95% LTV tier, all of which were fixed rate products.
This suggests that lenders are relaxing their attitudes to higher risk lending, perhaps in reaction to the Government's recently-launched Funding for Lending scheme, which aims to make £80 billion of cheap funding available to banks and building societies on condition that they lend more to small businesses and consumers in the hope that this will kick-start the economy.
Commenting on the figures, Sylvia Waycot, finance expert at Moneyfacts, said: "Attaining a deposit becomes more realistic if LTVs are raised and so after years of frustration potential FTBs must be doing jigs of joy in the street.
"Increasing LTVs will create a knock-on effect in the whole housing market. Not only will it aid the stagnation of the FTB market, but also the second movers market because they need FTBs to sell to. House buying as we all know is a chain and every link is essential; strengthen one link and the whole chain benefits."
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