First-time buyer mortgage choice falls post-Brexit
Research from Am Trust Moneyfacts showed the number of 95% LTV products dropped from 249 in June to 238 in August; the only LTV bracket to see a decline in product numbers month-on-month.
Products for borrowers with a 20% deposit have seen their choice of deals increase in the last month. Mortgages in the 80% LTV bracket fell from 623 in June to 597 in July but recovered in August by rising to 607.
Paul Flavin, managing director of Zing Mortgages, said he had noticed a definite drop-off in options for first-time buyers since the Brexit vote but this was not necessarily reducing the number of borrowers able to secure a mortgage.
He said that to secure a mortgage with only a 5% deposit, borrowers already had to be ‘squeaky clean’, which meant that they would meet the credit score of all remaining lenders in the market, but now they had less choice on rates.
Flavin said the reduction in the availability of 95% products had made it slightly more difficult for borrowers with multiple and varied income sources to secure a mortgage, as these options had now become narrower, as remaining lenders became ‘picky’.
In quarter one this year, 95% LTV lending accounted for 2.5% of total mortgage lending down from 3% in the previous quarter and 3.5% year-on-year. High LTV lending rose to 4.2% in Q2 2014 when the Help to Buy: mortgage guarantee was first introduced. The scheme is scheduled to close at the end of the year.
Flavin said first-time buyers being frozen out of high LTV mortgages because lenders’ income criteria was too restrictive are looking to parents to gift an extra 5% deposit to open up the mortgage options available to them.