The number of 95 per cent loan to value mortgages available for first time buyers has dwindled 16 per cent in just five months according to a leading financial services monitor.
Moneyfacts says in March this year there were 270 products available to first timers and offering 95 per cent LTV; today there are only 225.
The reason, it seems, is the recent stalling in house price growth and the potential for at least minor house price falls in the near future.
“Unfortunately, a downturn in property prices can have a significant impact on the higher LTV mortgage sector. A negative turn in prices effectively depreciates the provider’s resale value of the bricks and mortar, which results in providers reeling in their criteria and paring back their offerings to this section of the market” explains Moneyfacts’ Charlotte Nelson.
“It’s still unknown what effect the Help to Buy Mortgage Guarantee scheme ending this year will have, but the number of products at 95 per cent LTV is likely to dwindle yet again” she warns.
However, it’s not all bad news for first-time buyers as the costs of those mortgages that do still offer 95 per cent LTVs have also fallen.
For example, the average two-year fixed rate at 95 per cent LTV has fallen from 4.44 per cent earlier this year to 4.04 per cent today.
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