After re-introducing many of their deals for homebuyers with small deposits after lockdown rules eased, several lenders this week pulled their first-time buyer mortgages again temporarily.
Accord, Clydesdale Bank and Virgin Money all withdrew their recently introduced 90% loan-to-value mortgages for the time being amid high demand for these products.
Many lenders have yet to return to the 90% LTV market, so those that have supported that part of the market have been swamped with enquiries since the property market re-opened for business. Lenders are also having to deal with a backlog of applications that had to be paused when the lockdown was introduced. This has meant that some have had to pause higher loan-to-value lending for now in order to remain within their operational capacity.
Few lenders catering for first-time buyers
As lenders have stopped offering 90% loan-to-value mortgages temporarily, the range of available options for those with smaller deposits remains limited. Lenders are trying to support the market but with strong demand it’s hard to maintain their service levels.
For example, Coventry Building Society introduced two five-year fixed rate mortgages on Friday 12th June for homebuyers looking to borrow up to 90% of the property value, only to withdraw the deals on Monday 15th June. There’s still a small number of lenders offering to lend up to 90% but until more enter the market there may well be delays and products may be withdrawn quickly.
Borrowers benefit from falling fixed rates
Despite a limited choice of deals for those with small deposits, homebuyers and those looking to remortgage are benefiting from falling fixed rates, making mortgages more affordable.
According to research by financial website Moneyfacts, in June the average rate on a two-year fixed mortgage was 2.02%, down from 2.09% in May. For those looking to lock into a five-year fixed rate mortgage, the average rate was 2.26%, having fallen from 2.35% in May.
With the very best deals well below the average now represents a great opportunity to review your mortgage rate.
Market update: Lenders working through lockdown backlog