"We've made the decision to temporarily withdraw our 95% LTV range for new customers as we review our homebuyer proposition and monitor market conditions."
Virgin has announced the withdrawal of a number of mortgages for first-time buyers.
The lender has temporarily withdrawn all 95% LTV fixed rates for new customers.
In addition, all Help to Buy fixed rates will be withdrawn for new customers and selected Help to Buy product transfer rates will increase by up to 0.15%.
In a note to brokers, Virgin said: "We've made the decision to temporarily withdraw our 95% LTV range for new customers as we review our homebuyer proposition and monitor market conditions. Our 95% LTV range remains available to existing customers for product transfer.
"If you’re applying for one of these products on behalf of your customer, please send us the application as soon as possible."
Gindy Mathoon, founder and senior mortgage broker at Create Finance, commented: "One lender starts a trend and others then follow suit. It's pretty much like Tiktok. It's a bit hasty for Virgin to do this and probably doesn't send out a great message. This shows that they do not have confidence in the market and expect a bleaker outlook especially around house prices. We've seen interest rates decrease over the past few weeks, which has probably seen borrowers reignite their desire to purchase a home as funding has started to become cheaper than it was 6-8 weeks ago. For Virgin to withdraw their 95% LTV products is a very strange move. Let's hope this is a trend that is short-lived."
Craig Fish, founder and director at Lodestone Mortgages & Protection, said: "If more lenders start to pull rates at 95%, then this is going to have a dramatic effect on first-time buyers with only a small deposit. However, for now at least, I'm not convinced that this is going to be a market-wide problem. For example, you've still got the likes of Nationwide who are in fact reducing rates at this level of deposit. I think there'll be greater visibility going into the New Year and believe that this move is more about managing workloads than a lender running for the hills."
Justin Moy, managing director at EHF Mortgages, added: "Whilst this is not helpful for first-time buyers, this wasn’t a total surprise given the much discussed property price challenges that lie ahead during the next 12-18 months. For first-time buyers, a 5% deposit is a considerable amount of savings, and coupled with the Help to Buy Scheme's demise, will only delay the opportunity to own your home, and with rent likely to increase substantially this becomes a double-edged sword. The current Mortgage Guarantee scheme from the Government, designed to underwrite and encourage 95% mortgage lending, finishes at the end of this December. Perhaps lenders need some intervention again to support FTBs and have the confidence to keep these products available? Lenders will likely be chasing the lower LTV remortgage business for the next few months, as they try to win lower risk borrowers on cheaper rates, and lower their overall exposure to high LTVs, especially if there is some form of house price correction on the horizon."
