2nd August 2019
Smaller Deposit Means Fewer Options
Loan to Value Market Options
The number of 75 per cent LTV mortgage products available on the market now outstrips higher loan to values options by over six-to-one, according to recent Industry figures.
In total, there are 1,667 products on the market for those with a 25 per cent deposit handy, whereas people with 5 per cent to put down can choose from only 257 mortgage products.
The data covers the second quarter of this year. Last quarter, there were 1,458 and 260 products, respectively, meaning that the number of 75 per cent LTV options has increased while the latter has decreased.
Starter Home Price Rises
The average starter home price has now risen to £214,623. This means that the average disparity between the amount a 75 per cent LTV borrower is paying as a monthly mortgage payment is close to 50 per cent lower than those at 95 per cent LTV. This only adds to first-time buyer woes. This house price increase means that any benefit from lower rates is wiped out by the size of the loans that need to be serviced.
It is interesting to note too that after a period of product increase in 95 per cent LTV mortgage options, this option has seen a discernible drop in takers. In part this has to be about the way the mortgage market is shifting towards Bank of Mum & Dad-style options for First Time Buyers.
Less choice means less home owners
In short there are very real concerns about these sea changes. Lenders may well be moving too far in this direction. We may well find ourselves at a point where those who cannot rely on parental or grandparent support are not going to be able to find a mortgage at all. There will be no options suitable for their smaller deposit situation.
Here at The Finance Roome we believe this needs to be addressed by lenders. We certainly don’t wish to see this drop in high LTV products continue. It severely hampers those FTBs who want to purchase but can only secure a small deposit. If you think this might be you and you would like to talk to us about your options please do get in touch. We are here to help!