According to Moneyfacts, 11 mortgage lenders have reduced the maximum loan-to-value (LTV) ratios on their products in recent months.
Britannia and Alliance & Leicester have both doubled the minimum deposit demanded from first-time buyers, with borrowers having to pay a minimum of 10 per cent compared with 5 per cent, according to the report.
It has been claimed that the move could deter buyers in a slowing market.
However, a spokesperson for Britannia defended the decision, admitting that it came as a result of current market conditions: “At the end of December, Britannia took the decision to impose a maximum LTV limit on all products of 90 per cent.
"This is due to the current external environment, with house prices falling over the last few months and the Council of Mortgage Lenders forecast that house prices will continue to fall in 2008.”
Debbie Hughes, press manager, mortgages at Alliance & Leicester, commented: “The decision was taken towards the end of 2007 to reduce the prime residential maximum LTV from 95 per cent to 90 per cent.”
She added that the lender still offered alternative options to aspiring first-time buyers.
“We continue to offer products through PlusMortgage, which does enable customers to apply for a mortgage where the LTV required is above 90 per cent LTV and the maximum is 125 per cent LTV.
“We continually review the market to ensure our products are appropriate both for the business and for our customers, which is why the decision was taken to reduce the LTV on the prime products.”
Alan Lakey, partner at Highclere Financial Services, commented: “I have seen a trend in first-time buyers facing more and more problems as lenders have cut down their LTVs. There were plenty of lenders who tentatively put their feet into the water of the 100 per cent market but jumped out when things started getting tougher. First-times have got it hard and where I am based, people have to move 10 miles away in order to be able to afford their first place.”
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