Lenders are scrapping their home loan deals as the UK mortgage market goes into lockdown.
One of the UK’s biggest lenders – Nationwide pulled out of new deals, as have others.
Others are doing the same as the home mortgage market goes into lockdown amid the coronavirus which has brought the economy to a virtual standstill.
Nationwide said it will now only offer home loans to those with 25% equity or more. Though this does rule out first-time home-buyers or existing homeowners with equity in their home.
Nationwide said they have taken this decision on a temporary basis although, by continuing to offer home loans up to 75% LTV (loan to value), they can continue supporting the housing market.
Other lenders that have taken similar action but many have gone further, by reducing the loan-to-value ratio to 60%.
That means borrowers will need a 40% deposit or equity in their home to be able to get a mortgage.
Lenders that have done this include Barclays, Halifax, Virgin Money and The Family Building Society, while the Coventry Building Society has cut its LTV ratio to 65%.
Experts say the recent withdrawal of many higher LTV mortgage products and home purchase products is hopefully a temporary measure.
This gives lenders time to reassess risk in this area of the market and work out what it will be possible for them to offer while the current restrictions are in place.
If someone has already an agreed mortgage in place, this change will not effect them. Lenders say they will carry on with home loans already agreed.
Those who have exchanged contracts will be given the option to extend their mortgage offer for up to three months to allow them to move at a later date.
It’s been pointed out that people who would have been preparing and expecting to move house in the coming weeks now face a wait until Covid-19 restrictions can be lifted.
