Choice of 90% mortgages reaches eight-year high

Posted 16 November 2016 by Nick Parkhouse

The growing number of low-deposit home loans is great news, especially for first-time buyers overcoming the hurdle of finding a sizeable deposit...

The choice of first-time buyer mortgage deals has reached an eight-year high as more and more low-deposit deals come to the market. New data from a leading analysts has revealed that the number of 90% mortgage deals is at its highest level since 2008.

New figures from financial analysts Moneyfacts has revealed that there was an increase in the choice of mortgage deals across the board this month, with the low-deposit tiers enjoying a particular boost.

The number of 90% mortgage products rose to 594 in November, up 34 from the level in August and up 25 on the same period in 2015. The choice of 90% deals was up by 12 to 250, although this is 10 down on the same month last year.

Charlotte Nelson, finance expert at Moneyfacts, says: "Shortly after the EU referendum, the number of higher loan-to-value mortgages fell slightly, as providers quickly reassessed the risks of lending to borrowers with a smaller deposit and others worried that this was the start of a restriction of deals for first-time buyers.

"However, this month the number of products at 90% loan-to-value (LTV) has increased to the highest point since April 2008, when the number of deals stood at 708. The number of products at 95% LTV also saw a boost, reaching an eight-month high."

High loan-to-value mortgages are key to the mortgage market, as they help first-time buyers to get onto the property ladder. The Bank of England has been keen to ensure that lenders continue to offer these deals following the 23 June vote and it seems lenders are increasingly prepared to offer low-deposit deals.

Many lenders have found that the market for low loan-to-value mortgages is saturated, so they are increasingly looking to 90% or 95% deals as a way of winning mortgage business in a highly competitive marketplace.

There have been concerns that the end of the government's Help to Buy scheme would hit the number of low deposit deals available, but the latest figures show that this has not yet been the case.

Nelson adds: "The Help to Buy Mortgage Guarantee Scheme made it acceptable to lend at the higher loan-to-values again after the financial crisis. It's hoped that the removal of this crutch won't cause this fundamental part of a healthy mortgage market to collapse."


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