Lloyds blames fall in demand as it pulls the plug on guarantor deals

JONATHAN CLARK
JONATHAN CLARK HALIFAX HAD STRICT CRITERIA

Lloyds Banking Group has decided to scrap guarantor mortgages for both its Halifax and Cheltenham & Gloucester brands.

The lender plans to end the facility in March. Guarantor mortgages allow parents to act as guarantors for their children buying their first homes.

But the lender says these mort-gages have waned in popularity compared with Lloyds TSB’s Lend a Hand mortgage.

Lend a Hand requires borrowers to have a 5% deposit and the backing of someone else who has savings equal to 20% of the property’s value

Although brokers could access guarantor mortgages via Halifax and C&G, they will not be able to do so with Lend a Hand mortgages as they are only available direct.

A spokeswoman for Lloyds group says there are no plans to launch Lend a Hand in the broker market.

She says: “Given the activity for Lend a Hand, we’re seeing demand for guarantor mortgages falling. They now represent a tiny proportion of new business.”

Doug Bennett, principal at Sussex-based DB Financial, says: “Lloyds group is saying guarantor mortgages are not used but I’m sure they are.

I’ve used the facility in the past and although I don’t use it often I don’t see what the problem is with keeping it available.”

Jonathan Clark, mortgage partner at Hampshire-based IFA Chadney Bulgin, says Halifax didn’t offer guaran-tor mortgages in the true sense.

He says borrowers using the facility had to show that they would be earning enough not to need a guarantor within two or three years.

Clark adds: “For the past year or so it’s been impossible to place guarantor business with Halifax anyway. It has probably been doing little business on these mortgages because of the strict criteria it has in place.”