First time buyers faced a 2016 high for house prices in June as post-referendum the number of high loan to value (LTV) mortgage products fell for two consecutive months in the wake of the UK’s vote to leave the EU.
In August, the number of available mortgages for those with 5 per cent deposits fell from 243 in July to 238, a difference of five and the only LTV bracket to fall month-on-month, according to analysis by AmTrust and Moneyfacts.
This is the second month in a row to see the number of 95 per cent LTV mortgages decrease (from 249 in June to 243 in July) after the UK voted for Brexit.
By comparision, the number of available products for those with larger deposits rose month-on-month. For those with 20 per cent deposits the number of mortgages rose most – 10 month-on-month – from 597 in July to 607 in August.
In the first quarter of the year, 95 per cent LTV mortgage lending accounted for just 2.5 per cent of total mortgage lending, down from three per cent the previous quarter and down from 3.5 per cent year on year, pointing to a decline in lending to those with small deposits.
This is a fall from a peak of 4.2 per cent in Q2 2014 – when the Help to Buy Mortgage Guarantee was first introduced – to 2.5 per cent in Q1 2016.
However, there is some positive news for first time buyers, as mortgage rates fell to new lows in July.
The average rate for a 75 per cent LTV mortgage fell to 1.72 per cent in July, down 0.15bps year-on-year from 1.87 per cent.
Over the same period, the average rate for a 95 per cent LTV mortgage fell by three times as much (0.46 bps) from 4.32 per cent to 3.86 per cent.
Simon Crone, commercial director, AmTrust International, mortgage and special risks said: “The early indications are that Brexit has not prevented the upward march of house prices for first time buyers, making high loan to value critical to those hoping to take their first step onto the house ladder.
“In the wake of uncertainty caused by June’s vote for Brexit it is concerning, but perhaps not surprising, to see the number of available products for those with small deposits going into decline at a time when lender appetite for risk looks set to decrease.
“The availability of loans for those with small deposits received a much needed boost when the Government introduced the Help to Buy mortgage guarantee scheme, yet – while mortgage lending is increasing – lenders appear increasingly focused on lending to borrowers with greater deposits.”