Temporary maximum LTV restrictions applied by mortgage lenders continued to dominate brokers’ searches in August for the sixth month running, according to Knowledge Bank.
The criteria search provider said LTV restrictions following the coronavirus pandemic were having "a very real impact" on borrowers and their ability to buy or remortgage.
While many lenders retreated from the 90 per cent LTV market during the height of the pandemic, some re-entered the market in the months after but many only on a short-term basis, such as for two days. Overall, high LTV mortgages are down 94 per cent year-on-year.
Data from Moneyfacts out this week showed the number of mortgage deals at 90 to 100 per cent LTV has fallen to 76 this month, from 1,172 in September last year.
Knowledge Bank found terms relating to the coronavirus had prevailed over brokers’ criteria searches in the residential, second charges and bridging loans sectors for the past half year, with searches for ‘Covid-19: Furloughed Workers’ featuring prominently since April.
It predicted searches relating to furloughed workers would rise in the next two months, as furloughed buyers attempt to get mortgages approved before they are faced with potential uncertainty over employment when the furlough scheme ends next month.
However, many lenders have already begun tightening criteria for furloughed applicants ahead of the furlough scheme coming to a close.
Matthew Corker, lender relationship manager at Knowledge Bank, said: “Broker criteria searches in August provided clear signs that the housing market is still being affected by Covid-19.
“It is evident that there is growing concern around mortgage eligibility with consumers across the board, particularly those looking for higher LTV mortgages.
“The looming end to the furlough scheme also continues to feature prominently as those on furlough attempt to get mortgages approved before their furlough ends.”
Dominik Lipnicki, director at Your Mortgage Decisions, commented: “The Knowledge Bank findings are further proof that the mortgage market is far from what it was before the pandemic.
“Some wishful thinking industry colleagues have been tempted to take the recent mini property sales boom as the industry coming through the crisis, almost like it has never happened.”
Mr Lipnicki described recent sales as being the result of “pent-up purchases” rather than an indication that “things are back to normal”, and said it was still a “very fragile” market as lenders withdraw higher LTV deals.
Commenting on the searches relating to furloughed workers, Mr Lipnicki added: “We all recognise that the scheme has saved many jobs. What the lenders are trying to decipher now is how many of these jobs will still be in existence once the furlough scheme comes to an end. This has resulted in many lenders requiring letters from the client’s employers guaranteeing that their jobs are safe”.
In the buy-to-let market, meanwhile, searches for ‘holiday lets’ remained in the top five searches of August, with it likely to feature “prominently for months to come”, Knowledge Bank predicted.