Mortgage deals disappear from the market as borrowers are hard hit

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Mortgage arrangements prove key to the purchase of a home, as it is often not possible to do so without one. A mortgage is a loan secured against the value of a home, and it often takes decades to pay this off. As such, securing a good deal is important to many people, particularly those who are looking to get on the property ladder for the first time.

However, the lockdown crisis has clearly impacted the property market, with many mortgage deals drying up.

And the impact has been most strongly felt by first-time buyers.

Data from Moneyfacts has revealed that at the start of March, 779 deals at 90 percent loan to value (LTV) were available to Britons.

However, just six months later, the choice was now limited to around 60.

It appears lenders are taking more caution due to the financial impacts of the COVID-19 crisis.

There are concerns about mass unemployment once the government’s support measures come to an end, and fears people will not be able to keep up with payments.

Indeed, the prospect of defaults and repossessions are also a preoccupation as the UK reckons with a recession.

Rachel Springall, finance expert at Moneyfacts, commented on the difficult market.

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She said: “Product availability has plummeted since March when there were hundreds of deals to choose from.

“There are now very few. Those who had expected to get a foot onto the property ladder may now hold their plans, particularly if they only have a five percent deposit.”

A number of lenders have introduced new policies regarding mortgages within recent weeks including rules on furlough and temporarily withdrawal of specific products.

TSB and NatWest are just two lenders who have brought in rules about the use of furloughed income to secure a deal.

In June, Virgin Money pulled its 90 percent LTV deals, with a spokeswoman stating: “Following a strong increase in demand, we are temporarily withdrawing our 90 percent LTV purchase, remortgage and new build products in order to protect our service to existing customers and applications.

“Our 85 percent LTV products will continue to support customers with small deposits, and we hope to be back in the 90 percent LTV market soon.”

At the time, Mortgage Solutions stated this meant HSBC was the only big high street bank still offering 90 percent deals through intermediaries.

However, yesterday, HSBC took the decision to pull its 90 percent deal from the market, in a temporary move.

Its website reads: “We’re sorry, we can’t accept mortgage applications over 85 percent Loan to Value at the moment, because of the very high demand we’re experiencing due to the coronavirus outbreak.”

And commenting on the matter, Michelle Andrews, HSBC UK’s Head of Buying a Home said: “While the worst effects from COVID-19 appear to have thankfully passed, the country and the housing market have yet to return to normality.

“This is a temporary change for us. We look forward to other lenders joining us back in the market as well.

“Temporarily reserving our mortgages at over 85 percent LTV for those switching rates only is not a decision we have taken lightly, but one we will be reviewing it regularly.

“We remain open for business and continue to support our customers and the wider housing market.”

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