Mortgage brokers have welcomed news of lenders reintroducing 90 per cent loan-to-value products after a shortage during the pandemic.
Corey Whelan, director at Cambridgeshire Money, described lenders’ return to the 90 per cent LTV market as a “vote of confidence” in the housing market.
Mr Whelan added: “I’m certainly experiencing more customers that are beginning to fit the criteria of the new products as they are coming out and while it’s not going to be able to help everyone, it’s certainly a step in the right direction for the customer.”
Adam Wells, director at Lloyd Wells Mortgages, recounted a client who was looking for a 90 per cent LTV loan, but was told that a 15 per cent deposit would still be required.
He said: “[I] am seeing that the credit score does need to be higher. I had one client who was waiting and we tried to proceed at 90 per cent, but the lender came back to say they still needed a 15 per cent deposit.”
Mr Wells also said rates would hopefully fall as more lenders return to the 90 per cent LTV market.
However, advisers also warned that many borrowers may find themselves in a ‘take it or leave it’ situation with relatively high rates.
According to Aaron Strutt, product and communications director at Trinity Financial, many borrowers with smaller deposits were frustrated that deals were “so much more expensive” compared to the start of the year.
Mr Strutt said: “They are really in a ‘take it or leave it’ situation. Many first-time buyers are wondering if house prices and mortgage rates will come down next year, but many are not prepared to take the gamble.
“If they take the often near 4 per cent rates, they aim to swap to a better deal in two years' time.”
Data from Moneyfacts showed the average two-year fixed-rate at 90 per cent LTV was 3.79 per cent at the start of December, the highest recorded since February 2015.
It also showed the highest number of 90 per cent LTV products since the beginning of June, with 88 products at the start of December.
Greg Cunnington, director of lender relationships and new homes at Alexander Hall, said it had been great to see the recent “influx” of options returning at 90 per cent LTV.
Accord Mortgages, for example, relaunched 90 per cent LTV products on a “more consistent” basis last month after a series of limited releases. Its parent company, Yorkshire Building Society, launched a range of 90 per cent LTV mortgages in the following week.
Other lenders such as TSB and Virgin Money also launched 90 per cent LTV products in the first week of December.
Mr Cunnington added: “[We] have found a lot of first-time buyers who delayed buying due to Brexit and wanted to buy this year [have] have felt pushed out of the market by a lack of options in terms of mortgage availability.