Lender withdraws 85% LTV mortgages

Lender withdraws 85% LTV mortgages

Virgin Money is partially withdrawing 85 per cent LTV mortgages in order to “protect” its service to existing customers and pipeline applications.

The lender temporarily withdrew some of its 85 per cent LTV purchase products for new customers from 8pm yesterday (July 29), such as fixed-rate deals with initial periods of two and three years.

However, it will still offer five-year fixed products at 85 per cent LTV to new and existing customers.

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Virgin Money said it hoped "to be able to offer a wider range of lower deposit mortgages for new customers soon”.

The lender added that it “constantly” kept its products under review to balance demand with service, and had seen increases in demand from high LTV customers.

A spokesperson for Virgin Money told FTAdviser: “We always try to provide 24 hours’ notice to help brokers manage client expectations. However the market remains highly fluid which means we have to adapt to changing circumstances, something which is common for all lenders”.

Chris Sykes, mortgage consultant at Private Finance, said: “In the last few days we have seen a lot of lenders at the higher end of the market (80 to 85 per cent LTV) increasing their rates.

“Virgin Money was already very competitive in this region and by other lenders increasing their rates, it meant Virgin [were] even more competitive.”

Mr Sykes added: “I would imagine Virgin will be back soon with rates at a slightly higher level to manage demand for their higher loan to value offerings”.

Virgin Money’s partial withdrawal comes after the lender withdrew its 90 per cent LTV products in June to protect its service for pipeline applications, after an increase in demand.

Meanwhile mortgage brokers have told FTAdviser this month they have been losing clients due to shortages of high LTV products.

Rachel Dixon, mortgage adviser at RH Dixon, said the “exceptionally limited” supply of products at 90 per cent LTV meant she had reluctantly recommended clients to apply for a mortgage directly.

Ms Dixon continued that the “added pressure of large, high-street banks allocating funds to the market at 7.50am, and going by 8am... [made] the pressure unbearable”.