Higher loan-to-value mortgage products are beginning to disappear from the mortgage market once again in a sign fears of a second wave of coronavirus are prompting lenders to re-tighten their belts.
Clydesdale and Yorkshire Bank told brokers today (September 29) it would be temporarily withdrawing the majority of its mortgages at 85 per cent LTV alongside other products to help “protect and improve” its service.
The mortgages no longer available include all its two- and five-year fixed rates at 85 per cent LTV, except the newly qualified professional five-year fixed product, alongside part of its buy-to-let range, specifically those for loans for less than £1m.
A spokesperson for Clydesdale and Yorkshire said: “We’ve temporarily reduced the range of mortgages we offer to new residential and buy-to-let customers.
“This will help us improve the service for customers and manage pipeline applications. We keep our products under constant review and we anticipate widening our mortgage range again by the end of October.”
Chris Sykes, mortgage consultant at Private Finance, said although lenders would not “admit it”, criteria and rate changes were “speaking for themselves” and indicating lenders were “getting worried again”.
He said: “Although for the last few months we have seen some flexibility return to the market post lockdown, as the Covid cases rise across the UK so does the risk to lenders because of the longer term economic uncertainty and impacts we risk with the second wave.
“This can be seen most in the high LTV sectors of the market. We are seeing fewer and fewer lenders offering 90 per cent rates, or only giving 90 per cent rates as a one day only special.
“Others have almost priced themselves out of this market, still offering the LTVs but at rates much higher than a 90 per cent rate was pre-Covid.”
Martin Stewart, director of The Money Group, agreed. He said the market would see a “continual walk down of the market” by lenders, ending in a point where they felt comfortable again that the risk warranted the lending.
He added: “This could happen through intermittent withdrawing of products, tightening of criteria or restrictions on borrowing amounts.
“There were some glimmers of hope a few weeks back but the language and tone from the government has changed yet again and so it is perfectly understandable to expect to see a continual reassessment of the lending environment by those actually lending the money.”
Multiple lenders withdrew high LTV products from their range when the coronavirus first forced the UK into lockdown in March, with many citing the "difficult time" and "uncertain market" as the reason.
Many have since reentered the market, but often for very limited periods of time, such as two days, or with other restrictions.
imogen.tew@ft.com
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