Low deposit mortgage deals fall amid pandemic
4th September 2020
Low deposit mortgage deals have decreased in the past six months, as lenders tighten their criteria in response to the COVID-19 pandemic.
According to research conducted by financial data site Moneyfacts, borrowers with a 10% deposit had a choice of 779 mortgage deals at 90% loan-to-value (LTV) in March, compared with 326 in April and less than 100 in July.
Moneyfacts reported that in September, borrowers had a choice of just 62 to choose from.
At the start of the COVID-19 lockdown, prospective borrowers with 5% deposits had a choice of 391 mortgage deals at 95% loan-to-value, compared with just 14 six months later.
Meanwhile, 604 mortgage deals were made available for a lower LTV of 60% in March, compared with 443 by September.
Rachel Springall, finance expert at Moneyfacts, said:
“It will be hugely frustrating for first-time buyers to see further contraction in the higher loan-to-value mortgage sector.
“Product availability has plummeted since March, where there were hundreds of deals to choose from, there are now very few.”
In July, the Chancellor announced a temporary stamp duty cut to support the housing market, allowing first and second time buyers to get on the property ladder despite having a smaller deposit, as lenders play it safe amid the COVID-19 pandemic and its uncertainty.
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