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MONEYFACTS ARCHIVE. This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Published: 05/01/2017

The Help to Buy Mortgage Guarantee scheme may have come to an end last week, but that doesn't mean demand for high loan-to-value (LTV) mortgages is going to disappear anytime soon. The ongoing march of house prices means many borrowers will still need a mortgage with just a 5% deposit, and happily, it looks as though providers will continue to accommodate.

After all, figures from Yorkshire Building Society Group shows that demand for mortgages with an LTV of up to 95% remains strong, and happily, the mutual has pledged to continue lending at this level. The lender, which wasn't involved in the Government-backed scheme, increased its 95% LTV lending by more than 50% in 2016 compared with 2015, and isn't planning on slowing down.

The lack of Government backing certainly hasn't held back the mutual – the Group lent more than £650m in 95% LTV mortgages over the three years of the scheme, without Government support, and helped over 6,000 first-time buyers take their first steps on the ladder in 2016 alone. This just goes to show that the end of Help to Buy 2 (as it's also known) isn't going to lead to the demise of the 95% mortgage market, with some 30 providers now offering this kind of mortgage – and many, like Yorkshire, weren't even in the scheme in the first place.

"Some may see the withdrawal of the Help to Buy mortgage guarantee scheme as a blow to first-time buyers, however there are still plenty of options available to those with smaller deposits," said James Farrow of the Yorkshire Building Society Group. "Our figures show that there is still a huge demand for 5% deposit home loans, so we will continue to lend at this level and play our part in ensuring there is still plenty of choice for first-time buyers."

Yorkshire's findings coincide with our own research, which shows that competition is still going strong in the high-LTV mortgage market. Indeed, December saw the number of high-LTV mortgages continue to rise while rates fell further, and given that the bulk of those mortgages were available from non-Help to Buy participants (just 63 of 256 were from those participating in the scheme), it looks as though the sector will continue to thrive.

Demand from consumers is certainly likely to remain. "Many young people struggle financially to make that initial step on to the property ladder, with the need for a large deposit being cited as one of the biggest barriers," said James, and that barrier isn't expected to diminish any time soon. This in itself suggests that demand for 95% LTV mortgages will remain strong, and mortgage providers look set to accommodate.

What next?

Compare the top 95% LTV mortgages


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