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Halifax to scrap guarantor mortgages

Halifax plans to stop offering its guarantor mortgages in March, because of a lack of demand for the product.

Halifax’s guarantor mortgage allowed parents to act as guarantors for their children when buying their first home.

Halifax says the popularity of its other products, such as its Lloyds TSB Lend a Hand mortgage has overtaken the popularity of guarantor mortgages.

With its Lend a Hand mortgage, borrowers only need a 5% cash deposit, plus the backing of someone who will need savings equal to 20% of the property value.

The borrower’s deposit and the savings must equal 25% of the property value.

However, the offer is only available in branch.

A spokeswoman for Halifax, says: “We were a strong supporter of the first-time buyer market in 2009, representing nearly 50% of the shared equity, shared ownership market and driving new innovation like the Lloyds TSB Lend a Hand scheme which enables customers to get 95% lending through taking a charge on a parent or grandparents savings account.

“This drive continues in 2010 as we look to provide more support in new build and find ways to extend the Lend a Hand activity which already accounts for a third of first-time buyer lending in the LTSB channel.

“Given this new activity we are finding that the demand for guarantor mortgages is reducing and now represents a tiny proportion of new business’.”

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  • John Fish 26th February 2010 at 9:22 am

    Lend a Hand is “Hold our Hand, we are gutless & do not know how to underwrite”. Lloyds tsb haven’t got a clue.Lending money involves risk,& now the stupidity of fast track/ celf certify (the right to lie)has all but gone, arrears & possessions will drastically reduce to the levels of building society days with FTBs simply having to save 5%.
    Before the “we know it all” bankers took over the mortgage market, the Building Societies Commission parameter for lending (including first time & all existing mortgages on their books) was, that for each 12 month period, a society had to have no more than 1.7% of the new account balance for that 12 month period over six months in arrear. That’s not arrears balances of six months or more amounting to 1.7% of the total new borrowing balance, it was the total of all the mortgage account balances six months & more in arrear being no more than 1.7% of the total new lending balance. If that happened a society had to report to the Commission at once & it had to be included in the directors’ report with the annual accounts.
    We didn’t have credit scoring then & still lent 95% to FTB’s, & at normal rates.
    Yes, we did have indemnity policies, a nice little earner, that were rarely if ever called upon, and they failed only after a similar mad lending spree started by new lenders. Which was the first lender to display complete madness offering 100% mortgages to FTBs? Lloyds Bank. Ho, ho, ho. Now there’s irony for you.

    John

  • elliot Harkness 24th February 2010 at 9:10 pm

    Demand is low so we will withdraw – rubbish.This is a no cost but valuable old fashioned basic lending product that has helped many young people on to the housing ladder – just playing in to one of the current government’s housing ministers hands – he wants to legislate against parents being able to help their kids becaue it is discriminatory!!! Sorry can’t remember his name – that’show imprtant he is.
    Just wish Lloyds Banking group and others understood realbasic banking!!!

  • Shirley 24th February 2010 at 11:09 am

    This loss of a product is proof that less lenders means less competition, less choice for a borrower, higher costs for borrowers and more profit for banks.

    A very (sarcastic) big pat on the back for the Government and the FSA for bending the competition rules and giving away taxpayers money. I’m sure all the tax payers that have mortgages are truly grateful for your decisions over the last 18 months and will certainly be voting for you again at the next election!

  • David Sheppard 24th February 2010 at 10:18 am

    As things stand, C&G offer guarantor mortgages and I am finding them more amenable than Halifax anyway. The Halifax did not want to help my client with a guarantor option recently and maybe this was why.

    I do not see this as a major loss with how they reacted to my enquiry.

  • Phil Young 24th February 2010 at 9:31 am

    What a clap trap reason. Why don’t they just say another division of our group is going to undertake guarantor type mortgages & we intend to slowly strangle the IFA market!!

  • Ronnie Forrest 24th February 2010 at 9:19 am

    It is hardly surprising that demand for guarantor mortgages is low in the current market given the LTVs available. In addition the requirements for guarantors to fulfil can be onerous and unrealistic.
    When suitable products and an improved market for purchasing returns the demand for guarantor loans will return.
    A regrettable negative knee jerk reaction in this market. Yet another hurdle for the struggling FTBs to conquer.
    Why not retain this valuable addition to the lending criteria “on the back burner” as a USP for their organisation?
    Is this the Lloyds TSB influence or am I just a cynic?
    I has long been a mystery to me why lenders do not use any reasonable means at their disposal to assist borrowers and devise products and underwrite in a logical manner rather than try and force the “square peg borrower” into the lenders round hole of automated decisions.
    Another illogical move for the embattled broker to explain to clients.

  • DAve whitwam 24th February 2010 at 9:11 am

    So they take away an Intermediary product and replace with a branch only product? Another example of them not wanting our business…they have just taken a BTL Insurance product off me with a branch only landlords product after mailing my client direct…some things will never change, I wonder when they will start to remortgage all the guarantor mortgages onto this branch only product???

  • John Tidswell 24th February 2010 at 9:07 am

    I see the good old broker is left out in the cold again. Although the lenders will always waffle on about how keen they are to support the intermediary market as it is still a key part of thier business.

  • mortgagemicroscope 24th February 2010 at 9:03 am

    Guarantor mortgages are as popular as ever, for obvious reasons. Absolute spin to say there is a lack of demand.

  • William Reid 24th February 2010 at 8:41 am

    So the intermediary channel now has no guarantor opportunity through the Lloyds Group. Thankfully not a large part of my business but another “string in the bow” goes! 🙁

  • Mark Sutton 24th February 2010 at 8:38 am

    Yet another step backwards for the mortgage market. How can the Lend a Hand scheme compare to a Guarantor mortgage, they are two completely different beasts. I wish I had savings equal to a 20% deposit stashed away but sadly I don’t!

  • Graham Kennedy 24th February 2010 at 8:33 am

    How short sighted is this? Basing a decision on what the market has been like in unusual circumstances. What happens when we eventually return to 95% lending? And another thing why is there a need to remove it if it’s not beng used? Surely it would just become obsolete naturally without the need for a negative announcement? How about bringing lend a hand to the intermediary market as well? In my dreams!

  • Tim Robinson 24th February 2010 at 8:23 am

    Good old Lloyds TSB/ Halifax once again closing a further channel to the intermediary…. one is starting to think that they don’t want any more introduced business within this group.

    Great timing given the fact that the house buying season…if one exists anymore… is about to commence.

  • Danny Lovey 24th February 2010 at 8:09 am

    Yes, I understand the point that demand is low, but why withdraw it? What is the point, it costs nothing to keep it and it is a facility that it would be good to see Halifax keep for those cases that are looking for a gurantor mortgage. As the lend a hand is only available in Branch it also excludes a solution that an intermediary can offer a client and now the option of the gurantor mortgage is being withdrawn.

    I would suggest halifax think again on this one.