Higher loan-to-value products making their mark

Category: Mortgages
Date: 3/5/2010

Mortgages that require smaller deposits appear to be making their way back to the market, research conducted by Moneyfacts.co.uk has revealed.

Since the end of February, the amount of higher loan-to-value (LTV) product activity has increased markedly.

In the last week alone, NatWest, Cheltenham & Gloucester (C&G), Darlington BS, Saffron, ITL Mortgages and the Co-operative Bank/Britannia have launched new residential products in the 80 to 85 per cent LTV bracket.

The apparent changing mood towards higher LTV products could represent good news for first time buyers (FTBs) who have been unable to raise a sufficient deposit as lending criteria has tightened since the housing market crash.

"There are a growing number of mortgage providers which are becoming a little more accommodating with their credit criteria and this bodes well for consumers who will benefit from a growing competitive mortgage market," commented Darren Cook, spokesperson for Moneyfacts.co.uk

Furthermore, Royal Bank of Scotland (RBS), Teachers and Newcastle BS all raised LTVs for selected products this week.

RBS altered the maximum LTV of its 3.75 per cent tracker from 75 per cent to 80 per cent, while Teachers increased LTVs across its fixed range; those at 60 per cent to 80 per cent, and those at 80 per cent to 85 per cent.

Newcastle BS allowed 90 per cent advances for all house purchase (previously FTBs only) on its variable rate of 4.60 per cent and its fixed of 5.95 per cent.

Rates also came down in the week, with Lloyds, RBS, C&G, Northern Rock and Alliance & Leicester making cuts of between 0.1 and 0.50 per cent.

"It is pleasing to see that the average mortgage rate is falling at the same time as deposit requirements are getting smaller, but at levels that are still responsible," commented Mr. Cook.

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