Virgin pulls 5pc deposit mortgages

FIRST-TIME buyers face being locked out of the market next year after Virgin Money became the latest bank to stop lending to borrowers with small deposits.

The lender has “temporarily” pulled all mortgages requiring a 5pc deposit and Help to Buy deals for new borrowers.

Mortgage choice for firsttime buyers has shrunk by more than 40pc since the mini-budget in September caused interest rates to soar and nervous lenders to shun “riskier” borrowers – the number of deals requiring a 5pc deposit has fallen from 283 to 159.

Samuel Mather-holgate, of mortgage broker Mather and Murray Financial, said 5pc was a “wafer-thin layer of equity” in a falling property market.

He said: “I would expect to see the end of these types of mortgages for the next 12 months.” Gindy Mathoon, of broker Create Finance, said: “This shows Virgin does not have confidence in the market and expects a bleaker outlook especially around house prices.”

A Virgin spokesman said it was “monitoring market conditions closely” and existing borrowers could still remortgage with a small down-payment.