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’.”