Mortgages - It's bye bye to the 125% LTV market

With news that Birmingham Midshires has pulled its offering from the 125% LTV loan to value mortgage market that particular market can now officially be described as dead.

At the end of last week there were 6 lenders offering products - Alliance and Leicester, Coventry BS, Godiva Mortgages, Abbey, Northern Rock and Birmingham Midshires.

Earlier this week Alliance and Leicester, Coventry BS, Godiva Mortgages and Abbey pulled their offerings, while on Thursday, Northern Rock followed suit.

With the global credit crunch seemingly never ending, speculation about the shelf life of the 125% LTV market has been rife in recent weeks. Now that Birmingham Midshires has exited, it will no longer be possible to get a combined mortgage and unsecured loan with a potential value of up to 125% of property value.

Denise Harvey, mortgage analyst at Moneyfacts.co.uk, said: "It seems no one is prepared to stand out from the crowd in the current environment and accept the additional risk a 125% mortgage poses."

Harvey added that 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.

Meanwhile, only two lenders remain in the 100% plus mortgages market - Dunfermline BS Scotland only and professionals and graduates only and Scottish Widows Professionals only - Bradford & Bingley and Mortgage Express having recently pulled out.

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2008-02-22 12:30:46 © Moneyextra.com