This year the mortgage environment for borrowers with small deposits could be much more difficult than initially envisaged
When it comes to high loan-to-value mortgages, we have not seen a ‘normal’ market for the past three years. But now the Help to Buy 2 scheme has ended we have an opportunity to look at what the market may morph into in the future.
When the Government announced HTB2 would end as promised in December, it said the reason was “a wide range of 95 per cent mortgage products available from commercial lenders”.
I suppose it depends on how you define ‘wide range’.
But, given that some former HTB2 lenders and well-known high-street banks do not currently offer any 95 per cent LTV products at all, it seems safe to assume the range is not as wide as it was.
A number of members have come out with replacement 5 per cent deposit products, which is to be applauded, but the gap left by major lenders is huge.
The impact on potential first-time buyers is clearly going to be significant.
Even with other lenders utilising private mortgage insurance to support high-LTV products, we may be some way off the activity levels seen in recent years. And that is taking into account the fact HTB2 activity actually tailed off after its initial burst in the first six months of the scheme.
As advisers, it makes sense to prepare first-time buyer clients for a high-LTV market, with perhaps fewer products to choose from.
This year the mortgage environment could be much more difficult than either you, your clients or the Government initially envisaged for borrowers with low levels of deposit.
Pad Bamford is business development director at AmTrust Mortgage Insurance