According to finance experts, Moneyfacts, nearly a third of all mortgage deals have been pulled from the market in just three weeks. On 31 March, there were approximately 3,654 residential mortgage deals on offer from banks and building societies in the UK. That’s 1,585 fewer than the 5,239 deals available on 11 March – a reduction of 30%.
WHICH LENDERS HAVE CUT THEIR RANGE OF MORTGAGES?
Nationwide is now only offering mortgages to new borrowers with 25% equity or more. However, they’re still providing mortgage deals of up to 95% LTV to existing mortgage customers.
Santander and Skipton Building Society have taken the same course of action with their mortgage products.
Other mortgage providers such as Barclays, Halifax, and Virgin Money have cut their LTV ratio to 60%. As a result, new borrowers will require a 40% deposit or equity in their home to obtain one of their mortgages.
Meanwhile, Coventry Building Society has reduced its LTV ratio to 65%.
WHY ARE LENDERS DOING THIS?
Nationwide reported that it needs to focus on supporting existing mortgage customers while continuing to process current applications. At present, they’re receiving an extremely high number of enquiries about existing mortgages and ongoing applications.
Nationwide has said that it’s a temporary decision, to allow them to continue to offer mortgages of up to 75% LTV, which they say will continue to support the property market.
Like many high street banks and building societies, they’re running at lower than normal staffing capacity. They’re also dealing with a huge number of customers requesting mortgage payment holidays.
On top of this, there’s the risk of lending at a time when it’s difficult for any valuations or structural surveys to take place.
Eleanor Williams, a finance expert at Moneyfacts.co.uk, commented: “The recent withdrawal of many higher LTV mortgage products and home purchase products is hopefully a temporary measure while lenders reassess risk in this area of the market and work out what it will be possible for them to offer while the current restrictions are in place. With so much uncertainty at the moment, providers seem to initially be focusing on the support that their existing customers may need in the coming weeks.”
WILL EXISTING AGREEMENTS BE AFFECTED?
Nationwide has said these changes will not affect any existing applications, and they’ll continue to process any already agreed. Other lenders are offering similar reassurance.
Most are also introducing additional guarantees for customers who’ve exchanged contracts. They’ll have the option to extend their mortgage offers for up to three months to enable them to postpone a house move and put it back to a later date.
See the government’s website for more information on moving home during the coronavirus:
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