The number of 95% loan-to-value (LTV) mortgage products on the market reached a post-recession high in November, new figures have revealed.
According to insurance firm Genworth, the number of mortgage products available to buyers with a 5% deposit has risen by 119 over the last year to 260.
This means there are now more than six times as many 95% LTV loans available compared to September 2013, before the government’s Help to Buy scheme launched.
The average rate of products with a 5% deposit fell 1.15% from 5.27% in November 2014 to 4.12% last month.
Simon Crone, Genworth vice president, said: “There is little doubt that the Help to Buy mortgage guarantee has played an important role in rejuvenating the high LTV market. However, beneath the surface, it remains a long way short of full health and there is a danger that what we are seeing is a temporary restoration of appetite from lenders thanks in no small measure to government efforts.”
Genworth’s analysis raises concerns that lending at 90-95% LTV is actually in decline. There was £1.61 billion lent through 90%-95% LTV loans in Q3 2015, down by more than a quarter (27%) from the £2.20 billion lent in Q3 2014.
Crone said: “For many aspiring first-time buyers, raising the average deposit of 16% is simply not an option – especially in places like London where this amounts to vast sums of money. Hopeful buyers struggling to put money aside each month can quickly see deposit sums getting further and further out of reach, which is desperately disheartening when many can afford the repayments on a mortgage once they’ve got over this initial hurdle.
“The Chancellor’s Autumn Statement was clear that more needs to be done to help people enter the property ladder and we welcome the new initiatives announced to achieve this aim. However, these should not come at the expense of using mortgage guarantees or insurance to ensure wider access to high LTV mortgages.”
