High LTV Mortgages Re-enter The Market | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 21/05/2020

With just over a week since the social distancing rules were relaxed in England and the housing market could start moving again, mortgage deals at high loan-to-values (LTVs) have already started to re-enter the market, after many providers withdrew them when social distancing rules we introduced in March.

In fact, our research found that between March and May this year there was a significant drop in mortgage products, with 2,656 being withdrawn from the market during this time. High LTV mortgages saw the biggest reduction in products, as physical valuations were unable to take place, which in turn reduced the accuracy of property valuations, as well as lenders focusing on assisting existing customers as they applied for repayment holidays.

Between March and May, a total of 396 two year fixed deals at 90% and 95% LTVs were cut from the market, while 374 five year deals at the same LTVs were withdrawn. To show the significance these deal withdrawals had on the high LTV market, the total number of two year fixed mortgage deals on a 90% and 95% LTV fell from 431 in March to just 35 in May. The total number of five year fixed mortgage deals on a 90% and 95% LTV fell from 411 in March to 37 in May.

High LTV deals launched

Before the lockdown was introduced in March the housing market had been performing strongly, with house prices rising year-on-year, but with social distancing measures introduced, the housing market stalled as homeowners were unable to move home and first-time buyers had to delay moving into their new properties.

Now that some social distancing restrictions have been lifted in England, it is likely that the property market will be keen to get moving again and mortgage lenders are expected to start launching high LTV products to encourage first-time buyers and homeowners with high LTV to apply for mortgages and remortgages. In fact, since the beginning of this week alone, five mortgage lenders have launched high LTV deals or products aimed specifically at first-time buyers, including Yorkshire Building Society, Reliance Bank and Accord Mortgages.

In addition to this, our research has found that since Friday 15 May, there have been 25 new mortgage deals on 90% and 95% LTVs enter the market. During this time, the number of new two year fixed rate deals on a 90% and 95% LTV increased by 13, while the number of five year deals on the same LTVs increased by 12. During this same period, the average rate on a two year deal at 90% LTV fell by 0.07%, falling from 2.41% on 15 May to 2.34% today. At the same time, the average rate on a five year fixed deal at 90% LTV fell by 0.10%, falling from 2.67% to 2.57% today.

Commenting on the research, Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “The ongoing Coronavirus pandemic and subsequent lockdown has had a significant effect on the mortgage market, with lenders making numerous adjustments to their ranges and criteria to keep pace with a fluid and evolving situation. It is encouraging to see that a number of lenders are beginning to relaunch products and loosen the LTV caps and restrictions as the days progress. While these changes in the mortgage market are ongoing and constantly updating, for any borrowers considering a new deal at this time, speaking with a qualified, independent adviser with access to up-to-date information could be wise, as this may help them navigate any changing criteria requirements and to source the right products for their needs.”

Can I now move home?

Since the Government relaxed social distancing measures on Wednesday 13 May, those based in England are able to move home. Estate agents in England are also now allowed to open, but clients should only be able to visit through a pre-arranged appointment. In addition to this, house viewings are now permitted, but strict social distancing measures must be observed. More information about moving home during the Coronavirus pandemic can be found on the Government’s website.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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