Accord Mortgages has once again been forced to withdraw its 90 per cent loan to value (LTV) mortgage range as lenders warn widespread availability of low deposit deals may not return until November.
The lender was flooded with first-time buyer applications after launching its five-year fixed rates on 17 June. Demand for the deals soared, resulting in the lender’s busiest month ever.
The products will be withdrawn from 8pm this evening. Yorkshire Building Society will also suspend 90 per cent LTV lending.
Jeremy Duncombe, director of intermediary distribution at Accord Mortgages, said he had expected more lenders to come back into the high LTV market.
He added: “The fluctuation of lenders in the 90 per cent LTV tier is likely to be the norm for the foreseeable future as the whole market is currently relying on a handful of products from those lenders willing to support borrowers in this sector.
“It’s very much a chicken and egg situation. The vast majority of lenders are well funded and have an appetite to lend but capacity and maintaining service levels are the issues. Regulatory requirements and the need to support customer queries with payment difficulties and deferrals mean resources need to be prioritised, so there are less people available to underwrite the business.
“We know customer demand is there and we will do everything we can to support brokers and their clients, but until more lenders are there to support the current volumes, this new rhythm of product launches and withdrawals to manage service looks set to continue.”
On Mortgage Solutions’ latest podcast, Adapting to change – how the market is finding its feet, head of mortgage products at Skipton Building Society, Alex Beavis said those lenders who were serving small deposit buyers were not only struggling to maintain service levels because of an influx of new borrowers but they were also dealing with the first wave of payment holidays coming to an end.
But a major concern keeping lenders away, said Beavis, was the wider macro-economic uncertainty hanging over the mortgage market and the economy itself when the government’s furlough scheme and self employment support ends in October.
He said: “Will there be future joblessness that flows through to bad loans on lenders’ back books and hurts them from a capital perspective? That is what is making lenders cautious.
“Really it will be November at the earliest before we begin to see the picture emerge from this. And I would expect to see patchy provision in the 90 per cent market until we get to that point.”
Joined by James Chisnall, director of City Finance Brokers, Beavis said lenders did want to support the high LTV market because a lack of mortgage finance may start to reduce house prices if vendors were struggling to sell their homes. Skipton’s maximum LTV is currently 85 per cent.
Mortgage Solutions Podcast Episode 5: Adapting to change – how the market is finding its feet
Samantha Partington is a freelance trade and consumer journalist writing about property and personal finance. Previously she worked worked for the Daily Mail and Property Week. She is the former deputy editor of Mortgage Solutions and editor of Specialist Lending Solutions.
Before becoming a journalist, Samantha worked as a mortgage broker and latterly for a mortgage, bridging and secured loan lender. Samantha is CeMAP qualified. Follow her on Twitter @SamJPartington1.