With HSBC announcing their return to the 90% Loan-to-value arena on the 12th January 2021, it highlights a positive trend. The bank is one in a string of larger lenders to return, opening the market up to 1st time buyers again and potentially encouraging more smaller lenders to follow suit.

What is Loan to value?

Loan-to-value, or LTV is all about how much your mortgage borrowing is in relation to how much your property is worth. It’s a percentage figure that reflects the proportion of your property that is mortgaged, and the amount that is yours.

The number of 90% LTV products on the market has nearly doubled since last July, analysis from Moneyfacts shows. The data, which is due to be published in the Moneyfacts UK Mortgage Trends Treasury Report, found that the number of mortgage deals at a 90% LTV (which requires a 10% deposit) has increased from 88 on 1 December 2020 to 160 on 1 January 2021.  In addition to this, the average rates on both two and five year fixed rate deals at a 90% LTV have fallen month-on-month. The average two year fixed rate at 90% LTV has fallen by 0.14%, down from 3.79% on 1 December 2020 to 3.65% 1 January 2021, and the average five year fixed rate at 90% LTV has fallen by 0.13%, from 3.92% to 3.79% month-on-month during the same time period.

While choice has improved, rates are higher than in July 2020.

Moneyfacts finance expert Eleanor Williams says: “Not only is the increase in product choice a positive for borrowers, but it seems that a measure of competition may have started to return to some sectors as well.”

In recent months, lenders have been dipping in and out of the market, offering 90% LTV deals for only short periods. To now have products that will be available for longer periods will help meet the demand for these 90% LTV products and will provide more choice and certainty.

Henry Knight, Managing Director from Springtide Capital commented:

“With a variety of lenders and products returning to the higher LTV space, hopefully it brings a little bit of welcome normality and brings opportunities for those borrowers with a low deposit. Availability of high LTV mortgages, which typically only require a 10% deposit or less, help first time buyers become the next generation of homeowners.”

Those hoping to buy a property with a 10% deposit face limited choice and higher costs than they did before the pandemic, but with vaccines now available, everybody is hoping for a return to pre pandemic figures soon.

Major lenders such as Nationwide are also beginning to make rate cuts, and others are following creating a more competitive market. Now there is a Brexit deal agreed, house price rises and the roll out of the COVID-19 vaccines has begun, this should continue to give lenders more confidence to bring wider ranges of products to the market.

Borrowers requiring a mortgage to cover 95% of the purchase price have faced an even more challenging 2020, and they may have to wait a while for things to improve, with lenders only recently returning to 10% deposits and the current economic climate remaining uncertain.

With new products becoming available all the time, speak to one of our advisers today to discover the right option for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources:

https://www.mortgageintroducer.com/hsbc-launches-90-ltv-products/

What is LTV? | moneyfacts.co.uk

https://moneyfacts.co.uk/news/mortgages/first-time-buyer-deals-almost-double-month-on-month/

High-LTV lending back on the menu: Moneyfacts | Mortgage Strategy

Nationwide chops rates by up to 0.45% | Mortgage Strategy

It is business as usual in the mortgage market, despite the third national lockdown. With the current global pandemic, like everybody, the whole property market has found itself in a complicated situation, quickly having to learn how to adapt to the changing environment. It is vital to the UK economy that the property market remains open to facilitate the unprecedented demand seen in the market in recent months.

Many property transactions are currently waiting to complete before the Stamp Duty holiday deadline ends on 31^st March 2021. The whole industry is working towards making sure that all the aspirational homebuyers get their transactions over the line before the deadline.

The government continues to work closely with all parties to make sure there is a safe and robust system in place for everybody involved in the buying and selling process.

As we reported in June, many new regulations have been embraced and practices modified to make the home buying process safe and secure. The changes made to accommodate the COVID-19 pandemic continue to take extra time to facilitate and the industry has proven to be resilient and flexible.

RICS continues to revise guidelines for the property sector that outlines safe practices relevant to property agents, lenders, mortgage advisers, property lawyers/conveyancers, surveyors, energy assessors, property managers, home removal and associated professionals such as contractors involved in the property development, management and the home moving processes.

The whole market has been able to adapt and evolve to a more digitally enabled way of working, helping us operate above and beyond the government guidelines as the safety of our clients and staff is paramount. Understandably, physical viewings pose a concern although the industry remains well-positioned to carry out all elements of the transaction process in a safe and appropriate manner.

The impact on mortgages from the furlough scheme and the mortgage holiday scheme from 2020 are still not fully evident, but the industry is working hard to keep up to date with the changing landscape and act accordingly.

Henry Knight, Managing Director of Springtide Capital comments:

“Our key priority is to make sure we deliver positive customer outcomes, safely and comprehensively. We feel we have the right mix of experienced and knowledgeable colleagues to be able to meet the high expectations that the current situation demands. It serves no one’s interests if a borrower takes on an unaffordable mortgage and an understanding of all implications in the changing market is very important”

It has been reported that 81% of buyers and sellers are undeterred by a third lockdown.

We know the appetite to buy and sell or make home improvements is still strong and with the market remaining open for business, we can offer our customers the most comprehensive service possible by keeping up to date with all market aspects.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources:

https://springtidecapital.com/2020/06/positive-steps/

Guidance for professionals (rics.org)

81% of buyers and sellers undeterred by third lockdown | Financial Reporter