Brokers are warning the mortgage market will suffer following Abbey’s withdrawal of the last 100% LTV deal last week.
Jonathan Cornell, managing director of Hamptons Mortgages, says the disappearance of such deals will leave first-time buyers bereft of options and unable to get onto the housing ladder.
He says the knock-on effect will be felt across the market, with diminished demand for properties.
Cornell says: “I wasn’t surprised to see Abbey withdraw the deal – it was sensible and inevitable. But it’s an-other nail in the coffin for first-time buyers who are struggling to raise deposits.
“On the other hand, falling house prices mean those who have been saving will find it easier to get on to the housing ladder.”
Ray Boulger, senior technical manager at John Charcol, agrees that the lack of 100% LTV deals will have an impact, but says the full force of this will be felt when the market recovers.
He adds: “While I broadly agree with Cornell, I think the impact will be felt most when the market improves be-cause then the demand for such products will rise as first-timers feel more confident that prices won’t fall.
“That said, when the market recovers savvy lenders may offer products to meet first-timers’ demand for 100% LTV deals.”
Cornell adds: “In time, the market will stabilise and LTVs will drift back up but it will be a while before we see 100% LTV deals again.”
Earlier this year, Mortgage Express, Northern Rock, Alliance & Leicester, Coventry and BM Solutions all pulled their 100%-plus LTV deals in a single week.