First-time buyers struggle as lenders withdraw low-deposit home loan deals.


First-time buyers in England could face being frozen out of the property market because lenders are pulling home loan deals for those who can only manage a 10 percent deposit.

Despite the English housing market reopening, and record low mortgage rates due to the lockdown, risk-averse lenders have been withdrawing home loan deals catering for those homebuyers looking to borrow 90 percent or more of the property’s value, with some saying they simply could not cope with the unprecedented demand. This has been exacerbated by social distancing allowing fewer staff in offices to process applications and employees being seconded to answer mortgage payment holiday inquiries.

Among the lenders that have pulled out of the 90 percent loan-to-value (LTV) mortgage space during the last few days are Accord Mortgages (a division of Yorkshire building society), Virgin Money and Clydesdale Bank.

Despite some lenders, such as Bank of Ireland, returning to 90 percent lending, Nick Morrey, product technical manager at the mortgage broker John Charcol, said he is only realistically expecting HSBC and a small handful of other providers to be offering something to people needing a mortgage with only a 10 percent deposit and that as of last Thursday, no one was offering 95 percent mortgages through brokers or intermediaries, with Nationwide only offering 95 percent via its branch network.

He tells the Guardian: ”The market is desperate for some or any of the big six to join HSBC, who are literally allowing applications to be submitted for about 40 minutes early each morning, to control the volume of applications they receive.”

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