TSB (TSB.L) has withdrawn mortgage deals for customers with a 15% deposit as the housing market faces continued uncertainty.
Most banks have stopped deals with a 10% deposit, but TSB is the first to removed its 15% offering on all home purchase, remortgage and shared ownership products.
The industry fears a sharp fall in house prices and now HSBC is the only high street bank offering mortgages with a loan-to-value ratio above 90%, reports the Mail on Sunday.
These deals are limited in number each day with brokers reportedly selling out early in the morning.
Coventry Building Society is also offering a limited number of low-deposit mortgages on a first come, first served basis but the deal ends tonight.
Banks are withdrawing lower deposits due to fears they will lose money on mortgages if prices plummet and repossessions don not cover the money loaned.
Some mortgage applications were temporarily paused during the UK lockdown while lenders were unable to make physical property valuations.
The lockdown also had a knock on effect on productivity with bank staff working from home unable to keep up with mortgage application demand.
“Homeworking reduces productivity because they don’t always have as many screens. That can really reduce productivity,” Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, told the Mail on Sunday.
Estate agents were permitted to open and start physical viewings again on 13 May with strict coronavirus measures in place.
But uncertainty in the market has led to an increasing number of low deposit mortgage deals being withdrawn making it even more tricky for first time buyers to get on the housing ladder.
A TSB spokesman said: “We are working to support our customers as best we can.”
The average first-time buyer 10% deposit now stands at £24,189 ($30,343.89), jumping to £36,284 if a 15% deposit is needed, Rightmove said.
And in London a 15% deposit would require a deposit of £71,635 on average.