Lenders reintroduce 90% mortgage deals

With the country slowly coming out of lockdown and the easing of restrictions, lenders are keen to get the housing market moving again. So they’re welcoming borrowers with open arms by reintroducing some of the products they scrapped when the COVID-19 crisis started, including 90% mortgage deals.

In the early stages of the pandemic, when social distancing methods were introduced, the housing market stalled. Previously it had been performing strongly. Many banks and building societies pulled a range of products, including high loan-to-value (LTV) mortgages, making it much more difficult for people to obtain home financing.

However, in recent weeks the government has announced measures to bring the property market out of limbo. Estate agents can open their offices, buyers and sellers are permitted to view properties in person and surveyors can enter homes once more to conduct valuations. Allowing valuations removed one of the biggest hurdles to mortgage lending. Consequently, lenders have started to expand their services.

Research carried out by Moneyfacts revealed that during a one-week period in the middle of May, 25 new mortgage deals on 90% and 95% LTVs entered the market. Two year fixed rate deals on a 90% and 95% LTVs increased by 13, while five-year deals on the same LTVs increased by 12.

And consumers are taking advantage. After two months of lockdown, buyers are keen to press ahead with their plans. Data from Rightmove shows that online house searches have already returned to pre-COVID levels.

For those who can afford a 10% deposit, there’s much to be optimistic about. With the base rate at almost zero, fixed rates continue to be offered at all-time lows.

Encouraging Signs

Moving back to 90% mortgage deals demonstrates how committed lenders are to trying to ensure that business gets back to normal as quickly as possible. As people begin buying and selling properties once again, it’s expected that the number of 90% mortgage products will continue to rise. It may take a little longer for mortgages above this LTV level to return, but in any case, buyers’ choices should increase in the weeks and months to come.

June 2020