Northern Rock and BM Solutions have withdrawn their 125 per cent mortgage products from the market, the lenders have announced
Northern Rock's high loan-to-value Together mortgage was pulled last week follows by Birmingham Midshires' Mortgage Plus shortly after.
Jacqualyn Gill, public relations manager for Northern Rock, said the lender was trying to rein back its mortgage lending, and in light of the number of mortgage providers who recently pulled their 125 per cent products from the market, the bank said it did not want an imbalance in lending.
She said: "It was a very successful product for a number of years, but because of the position we now find ourselves in it was the right time to withdraw it from our range. It did help a lot of people get on the housing ladder."
Clare Mortimer, senior media relations manager for Birmingham Midshires Solutions put the withdrawal of Mortgage Plus down to prevailing market conditions. She said: "We have removed the Mortgage Plus and do not intend to replace it at this time, and we have done this after reviewing the market and we believe it is appropriate at this time."
She added that Mortgage Plus mortgages which had already been sold would be honoured. She said: "We only take business through intermediaries so if an intermediary has placed the business, if we have issued a key facts illustration. If a case has been submitted and we have issued a KFI, that will be honoured."
Despite the pulled product, she remained optimistic about the mortgage market: "There are strong fundamental market conditions and the mortgage market is fast paced and dynamic and as lenders we need to move with that."
However, Edward Boyle, IFA for Paisley-based Millbrae Financial Services Limited, said 125 per cent mortgage products were bad news. He said: "There will always be people there who would accept it if it was offered to them, but we would never advise a client to stretch themselves like that it is irresponsible. It is a good thing that they have been withdrawn from the market. They don't do the purchaser any favours at all. For anybody who wants to borrow that kind of extra money, it means that normally they have financial problems, so that is not going to solve the problem."
On the mortgage market generally, he added: "I think it could get more difficult for people to borrow money, because lenders will be more circumspect on how they lend to and this will have a knock on effect on the people trying to sell the properties."