Experts predict lenders will tighten up on maximum loan to values

July 16, 2016 by Brendan O'Neill

Lenders

Buyers who don’t have a large deposit may find themselves struggling to get on to the property ladder, as experts warn that lenders may panic and reduce the number of products with a high loan to value.

According to experts, the decision to leave the EU has raised concerns with lenders, who fear that there could be a second recession which will result in job losses and falling house prices. Smaller lenders may be among the first to reduce the maximum loan to value mortgages, especially if they borrow from the money markets, also known as the capital markets.

The experts report that the source of funding for lenders has already nearly dried up, which is creating similar conditions to those during the credit crunch in 2007 and 2008. Lenders can still provide mortgages using the savings of their customers. However, small lenders who raise funding from private equity firms and large investors may find it difficult as time goes on.

This may be especially difficult for borrowers who have slightly unusual requirements for a mortgage, like being self-employed or approaching retirement, as smaller lenders tend to cater to their requirements.

Following the Brexit vote, some lenders have already started to remove their products with a high loan to value, including some in London.

Borrowers may need to seek expert advice from a mortgage adviser to ensure that they find a suitable mortgage for their circumstances. Advisers undertake CeMAP training so that they have the relevant knowledge to assist buyers.