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First-time Buyer

Low deposit mortgage sales fell by a third last year

Paloma Kubiak
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Paloma Kubiak

There were 35% fewer mortgage sales within the 90-95% loan to value (LTV) tier from January to September last year, compared to 84,419 in 2019.

During the nine-month span, there were 54,527 mortgages sold to borrowers requiring 90-95% LTV amounts (homebuyers with a 5-10% deposit). 

Compared to an average of 70,788 sales at 90-95% LTV during the same months in 2017, 2018 and 2019, sales were down by 22% in 2020, data analysis by Quilter revealed. 

Last year, many lenders restricted mortgage loans to 85% LTV and below so while product availability was not as scarce, only 91,323 mortgages were issued to borrowers requiring loans of 85-90% LTV. This was a 26% fall on the 124,052 mortgages sold in this tier in 2019. 

It was also a 23% drop on the average of 118,918 mortgages at 85-90% LTV sold between 2017 and 2019.

For all mortgages between 85-95% LTV, there were 145,850 sold last year down from 208,471 in 2019.

Gemma Harle, managing director of Quilter Financial Planning, said: “These figures illustrate how difficult 2020 has been for the first-time buyer market who typically require higher loan to value deals.  

“Since the introduction of the stamp duty holiday, many mortgage brokers will tell you they have never been busier.

“However, the holiday has done little for firsttime buyers who were paying little to no stamp duty anyway but have had the rug pulled out from beneath them as lenders exited the high LTV market meaning they needed a bigger deposit to get a foot on the housing ladder.

The next number of months may play into the hands of some first-time buyers as once the generous government support schemes to help keep people in employment and the stamp duty relief is cut it is likely we will see a reduction in house prices making them more affordable.