Mortgage brokers have warned that more lenders will follow HBOS’s decision to penalise borrowers who have deposits of less than 25 per cent.
Last week, the firm introduced three new loan to value bands for products – 0-75 per cent, 75-90 per cent and 90-95 per cent.
Borrowers who provide a deposit over 25 per cent will typically be charged 0.1 per cent less while those with less than 25 per cent will be charged 0.14 per cent more on average. The changes will apply across Halifax, Bank of Scotland and Intelligent Finance mortgages.
Independent mortgage consultant Kevin Duffy says he has no doubt that other lenders will follow. He says: “Mainstream lenders are talking to each other far more furtively than they were 12 months ago. We will see a lot of lenders making the same changes.”
Mortgage Force chief executive Rob Clifford says it would be inconceivable if other lenders did not make these changes.
he says: “How can they not respond when a lender like HBOS, which takes 20 per cent of the market, has made this move?
“I think it is very regrettable that we are seeing pricing distinguished between 75 per cent and above, given there is such a big consumer demand for products between 85 and 95 per cent.”
Duffy believes HBOS’s move reflects the fact that it relies on wholesale funding more than people initially realised.
He says it is an attempt to instil confidence in its mortgage parcels among potential buyers.
Halifax also announced last week that it will be launching a new product range for first-time buyers.
It will include a five-year fixed-rate product available for up to 90 per cent loan to value at a rate of 5.69 per cent.