The squeeze on mortgage lending continues

As well as a reduction in the number of mortgages, many lenders are also tightening their lending criteria as they price the risk of default into the equation. LTV's are becoming ever lower for the best priced products.

Darren Cook, mortgage expert at, comments: "Property values are still falling and there is no indication at which level they will bottom out. Fears of negative equity and diminishing values of supporting security has resulted in providers hedging themselves by offering more mortgages that require a minimum deposit of 40%. Mortgages with a maximum loan to value of 60% have increased by 84% to 155 products and unfortunately for borrowers, this is where the better rates are to be found today.

Not much use if you are a first time buyer, as a 40% deposit is not really an option.

Darren Cook continues: "During the mortgage boom, products were driven by pricing and there was minimal margins attributed to risk or probable default. We now see that the market is becoming largely risk driven, which is evident from the demise of many products with loan to values of between 95 and 90 per cent."

"The difficulties lie in the lack of liquidity within the market and providers having no appetite or being unable to lend on a larger scale. In essence, the price list shows that mortgages are getting a little cheaper, but the stock rooms are currently nearly empty.

"Ten lenders including Halifax, Woolwich, Cheltenham & Gloucester and Royal Bank of Scotland have been quick off the mark in announcing that they will be passing on the full 0.50% cut in their SVRs. With an increasing number of customers on SVR, due to the lack of deals this will be a welcome relief."