Lenders pull 125 per cent mortgages
Published On 22 February 2008
A new report has suggested that mortgage lenders in the UK have abandoned deals which offered first-time buyers loan-to-value (LTV) ratios of 125 per cent.Consumer website Moneyfacts.co.uk noted that six lenders offered mortgages with 125 per cent LTV at the end of last week (February 15th), but added that all of these deals have now been withdrawn.
"It seems no one is prepared to stand out from the crowd in the current environment and accept the additional risk a 125 per cent mortgage poses," explained Denise Harvey, a mortgage analyst at the site.
"While property prices were increasing, the risk was one that a number of lenders were prepared to take, but following on from the credit crunch and with property prices expected to remain stagnant or decline throughout 2008 these mortgages are no longer on the menu."
For first-time buyers, Mr Harvey said that there were still numerous 95 per cent LTV mortgages available.
However, he questioned whether many first-time buyers would be able to afford the required £15,000 given that average property prices are £300,000 or more in some parts of the country.
