Property experts and home buyers are urging nervous lenders to bring back the 90% mortgage to stop house sales falling off a cliff when the stamp duty holiday ends in March.
All major mortgage companies withdrew their high loan-to-value offerings in March fearing a financial crisis over coronavirus.
That caused more than a quarter of all potential buyers to abandon their new home plans, according to new research from leading brokers First Mortgage.
Although more and more 90% mortgages are appearing the offering is still relatively small.
First Mortgage’s David McGrail explains why it is important to get high loan to value mortgages back available before March.
“A 90% mortgage is considered by many to be the mortgage of choice for first time buyers, and with the stamp duty holiday ending, many first-time buyers will be looking for that incentive to move. With a high loan to value it means the buyers who might otherwise struggle to save a 20% deposit can get on the housing ladder with just a 10% deposit, making a house move much more viable in the current economic climate.”
9 in 10 potential buyers say that the reintroduction of the 90% mortgage will give them a better opportunity to become homeowners in 2021.More than HALF of homeowners say that the re-introduction of 90% mortgages is a good idea and almost a third of potential buyers have said that they are planning on taking a 90% mortgage at some point this year.
18–34-year-olds are showing to be the most positive towards the idea of the 90% mortgage more than any other age group, showing the desire of first time buyers to get onto the property ladder.
The results of a recent study show that they are the most likely to think the reintroduction of the 90% mortgage is a good idea (72% vs a national average of 60%). The positivity from this age demographic may be because they see the 90% mortgage as their golden ticket to becoming homeowners in 2021 without the need to save for a large deposit.
Although many look positively on the return of 90% mortgages, half (55%) of potential buyers admit they are wary of them. McGrail explains what to consider when searching for a mortgage.
“When looking to buy people should be seeking expert help especially when it comes to something as complex as mortgages. With a higher loan to value mortgage (such as a 90% mortgage) it is important to consider the interest rate of that product. Whilst a lower deposit might make it more appealing, it might make more financial sense for some to save longer for a larger deposit and a lower interest rate. When considering mortgages an advisor should be your first step.”
