"Lenders have come to the party in recent months" as low deposit mortgage choice hits 17-year high

BROKERS have said “lenders have come to the party” as new data from Moneyfacts shows that the number of mortgage deals at both 95% and 90% loan-to-value has risen to 1,360, the highest point in 17 years (1,532 – March 2008).

According to Moneyfacts, the availability of deals at 95% loan-to-value rose to 464 (575 – March 2008), while the availability of deals at 90% loan-to-value rose to 896 (957 – March 2008). Product choice overall rose month-on-month, to 7,062 options, its highest count since October 2007.

Andrew Montlake, CEO at London-based Coreco, welcomed the news: “Lenders have come to the party in recent months, engaging with brokers and consumers to develop products that help to boost lending, especially in the all important first-time buyer market.

"With the government rallying regulators to get the UK economy firing, this does appear to be having the intended effect, at least on the mortgage market. Product numbers are at their highest level since before the Global Financial Crisis.

"We are highly unlikely to get a repeat of that this time round as lenders these days have a different mindset and will not allow a repeat of 2008. Though the rise in product choice is encouraging, what's less encouraging is that rates have started to rise again, albeit only slightly.”

Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, said: "With affordability a constant thorn in many borrowers' sides, we've seen a huge amount of innovation among lenders in recent months, something the Government is keen to see more of. This is almost certainly feeding into product volumes.

“Lenders are keen to get the mortgage market firing and they know that, in order to do so, the spark is first-time buyers and people with smaller deposits. More choice is fantastic but equally people need to ensure they are getting the right product and to that end should speak to a broker.”

Katy Eatenton, Mortgage & Protection Specialist at St Albans-based Lifetime Wealth Management commented: “Lenders have been very active over the summer months, looking at new ways of improving affordability by tweaking their criteria or enabling people to borrow that little bit more. Even small tweaks can make a big difference for many aspiring first-time buyers, who are typically those buying with a 5% or 10% deposit."

She cautioned: "Rates, however, have started to edge up and may continue to rise throughout September so buyers need to lock into rates as soon as possible.”

Ranald Mitchell, Director at Norwich-based Charwin Mortgages, said the Budget could influence demand: “The surge in mortgage products at both 90% and 95% loan-to-value is a clear sign the market is working hard to keep low-deposit lending alive and safe, opening the door for more first-time buyers and movers. With more homes coming onto the market, confidence is returning and people are seizing the chance to make their move.

"The big question now is what the delayed Budget will mean in real terms for UK households. Will it be another financial pinch, or could we quickly shift from a gentle squeeze into a full Chinese burn on borrower confidence.”

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages commented: “Lenders are bending over backwards to allow potential borrowers to buy their dream home, coupled with greater affordability opportunities, helping borrowers stretch their incomes a little further. For those with smaller deposits, now may be the time to consider your options and check your budget. You may be surprised what you could achieve and get on the property ladder.”