Going, going, gone – 125% LTV mortgages are no more
“At the end of last week there were six providers offering 125% mortgages; now there are none. BM Solutions has become the last lender to pull out of this area of the market.
Denise Harvey, Mortgage Analyst at Moneyfacts.co.uk, comments:
“It seems no one is prepared to stand out from the crowd in the current environment and accept the additional risk a 125% mortgage poses.
“While property prices were increasing, the risk was one that a number of lenders were prepared to take, but following on from the credit crunch and with property prices expected to remain stagnant or decline throughout 2008 these mortgages are no longer on the menu.
“Only two lenders remain in the 100% plus mortgages market now, with Bradford & Bingley and Mortgage Express pulling out this morning. Dunfermline BS (Scotland only and professionals and graduates only) and Scottish Widows (Professionals only) are the only lenders which remain. Only time will tell if the market will continue to offer these mortgages but it will be no real surprise if these last two disappear as well.
So what now for first time buyers?
“In recent months many lenders have reduced their maximum LTVs. Although there is still an abundance of 95% products. However, with average property prices in some part of the country reaching upwards of £300K, how many first time buyers can afford the £15K deposit needed?
“For first time buyers there are limited options, with fewer providers now offering 100% mortgages. There are also shared ownership schemes and open market home buy schemes. We may also see an increase in the number of guaranteed mortgages.
“We will have to wait and see if there is any good news for first time buyers when the Chancellor makes his Budget speech on 12 March.
What other products are out there?
“For anyone coming to the end of an existing deal, particularly Northern Rock customers who are being advised to look elsewhere for a new mortgage when their existing rate expires, there are still some good deals to be had.”
Fixed Rates
Company |
Rate |
Period |
Max LTV |
Fee |
Redemption |
Cumberland BS |
5.08% |
To 1.2.10 |
95% |
£995 |
1st 2 years |
Newcastle BS |
5.25% |
To 31.3.10 |
95% |
£999 |
To 31.3.10 |
Post Office |
5.34% |
To 30.4.11 |
95% |
£399 |
To 30.4.11 |
Yorkshire BS |
5.39% |
To 31.3.11 |
95% |
£995 |
To 31.3.11 |
Direct Line |
5.29% |
To 30.4.13 |
95% |
£499 |
To 30.4.13 |
Dunfermline BS |
5.24% |
To 31.5.18 |
90% |
£599 |
To 31.5.18 |
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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