Lenders pull 90% LTV mortgages from the market

This week, a number of high-profile mortgage lenders including Virgin Money, Accord Mortgages, Yorkshire Bank and Clydesdale Bank have withdrawn their 90% loan-to-value (LTV) deals from the market.

Many mortgage providers withdrew high LTV mortgages at the end of March and during April as the Coronavirus pandemic started disrupting the UK economy. However, as social distancing measure began to be relaxed, many providers started to reintroduce these deals into the market again. In fact, our research has found that on the 1 May 2020 there were just 100 mortgage deals available at a 90% LTV, which had increased to 183 in just one month. On 8 June 2020, there were 191 mortgage deals available at a 90% LTV. Between Monday and Tuesday, however, the number of deals at a 90% LTV had fallen by 87, standing at 104 on Tuesday 9 June. Wednesday had seen a slight increase again, with 118 deals at 90% LTV available. A reason for the large drop in products available at a 90% LTV between Monday and Tuesday can largely be attributed to Virgin Money, Yorkshire Bank, Accord Mortgages, and Yorkshire Building Society all withdrawing their 90% LTV deals on Tuesday.

The picture for mortgages at an 85% LTV is much more stable. On 1 May, there were 208 deals available at 85% LTV, which had increased to 286 on 1 June. The number of deals at 85% LTV continued to rise, with 318 available on 8 June, there was a slight dip on the Tuesday with the number of products falling to 313, but it increased significantly again a day later with 338 products available on the 10 June.

Meanwhile, borrowers looking for a 95% LTV will have seen the number of deals fall since May. On 1 May, there were 41 deals available at a 95% LTV, falling to 31 a month later on 1 June. On the 10 June, the number of 95% LTV deals stood at just 29.

Borrowers looking for a high LTV mortgage should expect 90% and, eventually, 95% LTV mortgage deals to start returning to the market. At the moment, it seems many providers have been pulling 90% LTV deals temporarily, which could be because the number of applications for these deals has been so great that they have withdrawn the products so that they can focus on processing the current applications. In addition to this, with the current uncertain economic climate, many lenders appear to be much more cautious than they were at the beginning of the year and are withdrawing 90% LTV deals, along with delaying reintroducing 95% LTVs products, until there is more economic certainty. The good news for borrowers looking for a high LTV mortgage is that providers may look to start reintroducing these deals once the economic climate is more stable and they can once again process the applications.

“Borrowers hoping to purchase or take advantage of low rates to remortgage at a high LTV may have been disappointed to see that amount of choice available to them has fallen over recent days,” said Eleanor Williams, finance expert at Moneyfacts.co.uk. “This is likely to be due to the level of demand for these products being overwhelming to the lenders who had brought these offerings back. In addition, it may be linked to uncertainty surrounding property valuations, which results in providers acting with caution around higher-risk lending. These higher LTV products are often favoured by first-time buyers, who are a vital part of keeping the housing market running. Therefore, we would hope to see lenders return these products to their ranges soon. The more providers who are able to do so will not only ensure greater choice is available to consumers, but would hopefully also balance the level of demand.”