Mortgages

High-LTV product choice remains 90% below pre-Covid levels

At 90% LTV, there are just 72 products available on the market today.

Rozi Jones
|
29th June 2020
decline graph chart down decrease drop
"Lenders moving forward may need to assess how they intend to approach widespread extenuating circumstances and the risk these may bring to their lending decisions"

90% and 95% LTV mortgage product choice remains at just a tenth of the levels seen in March before the Covid-19 lockdown period began, according to the latest figures from Moneyfacts.

The total number of mortgage products available on the market - across all LTVs, fixed and variable rate products - currently sits at 2,748, down from 5,222 in March but up from recent lows of 2,566 seen in May.

However at 90% LTV, there are just 72 products available on the market today, down from 779 in March and further below the 100 products available at the height of the pandemic in May.

95% LTV product choice is also at a record low, down to just 14 products from the 391 available in March, 162 in April, and 41 products in May.

As high-LTV product choice dwindles, the average two-year fixed rate has dropped by 0.45% and the average five-year fixed deal has seen a cut of 0.51% since the start of March. The average SVR has also reduced by 0.42% over the same period.

The difference between the average SVR and the average two-year fixed deal is now 2.50%.

Eleanor Williams, Finance Expert at Moneyfacts, said: “There has been a steady decline between March and May of available mortgage products of 2,656, with the largest drop in product numbers occurring between 1st March and 1st of April which is the most significant fall in choice since these records begin in 2011. There was a slight “bounce back” between the start of May and the beginning of June with 244 more products becoming available across the market, but sadly this curve has not continued on a smooth upward trajectory over the course of this month.

“The recent product count fluctuations have been mainly focused around the higher-risk, higher LTV tiers which can be explained by a number of possible factors. There has been an overwhelming level of demand from borrowers seeking products in these sectors, leading to some lenders who had relaunched offerings needing to pull them back to ensure their workload could be managed. The potential for negative equity issues should house prices slump is now also a spectre. This will be especially disappointing to first-time buyers where there are a limited number of products available to those with a smaller deposit at a time where savings rates fall to new lows.

“Lenders moving forward may need to assess how they intend to approach widespread extenuating circumstances and the risk these may bring to their lending decisions, such as gaps developing in household incomes and also other economic impacts that may directly affect the affordability of household borrowings.

“The last few months have been challenging for both mortgage providers and for borrowers alike, however, both have shown a willingness to be flexible in light of difficult circumstances. Lenders have an appetite to lend and keep the mortgage sector moving, which is a vital contributor to the UK economy. The demand for products from borrowers has in some areas been overwhelming and further change may be required on both sides as the aftermath of the pandemic becomes clearer.

“To keep pace with an industry which is making updates to products and criteria with great frequency, consumers who want to review their mortgage options would be wise to consult with an independent and qualified financial advisor to explore the best choices for their circumstances and who is aware of the most up to date options.”

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