Low deposit mortgage deals fall amid pandemic
Low deposit mortgage deals have decreased in the past six months, as lenders tighten their criteria in response to the COVID-19 pandemic.
According to research conducted by financial data site Moneyfacts, borrowers with a 10% deposit had a choice of 779 mortgage deals at 90% loan-to-value (LTV) in March, compared with 326 in April and less than 100 in July.
Moneyfacts reported that in September, borrowers had a choice of just 62 to choose from.
At the start of the COVID-19 lockdown, prospective borrowers with 5% deposits had a choice of 391 mortgage deals at 95% loan-to-value, compared with just 14 six months later.
Meanwhile, 604 mortgage deals were made available for a lower LTV of 60% in March, compared with 443 by September.
Rachel Springall, finance expert at Moneyfacts, said:
“It will be hugely frustrating for first-time buyers to see further contraction in the higher loan-to-value mortgage sector.
“Product availability has plummeted since March, where there were hundreds of deals to choose from, there are now very few.”
In July, the Chancellor announced a temporary stamp duty cut to support the housing market, allowing first and second time buyers to get on the property ladder despite having a smaller deposit, as lenders play it safe amid the COVID-19 pandemic and its uncertainty.
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