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HSBC has withdrawn its range of 90pc mortgages after being inundated with applications from first-time buyers desperate to get on to the property ladder.
The bank has struggled to cope with the spike in demand since the Government announced that stamp duty would be waived for the vast majority of purchases.
The tax giveaway has caused a rush of buyers looking to purchase properties, pushing prices to a record high.
Mortgages that require 10pc deposits or smaller are typically only for first-time buyers. Those looking to make their first property purchase with larger deposits can still get a loan with the bank.
The decision is another blow to those with small deposits as the market for mortgages shrinks. As well as first-time buyers, movers who have little equity in their property have also found it difficult to obtain finance.
HSBC was the only high-street bank to keep offering 10pc loans throughout the coronavirus crisis, but it said it was overwhelmed with applications. The mortgage processing times had lengthened significantly, HSBC said, and it wanted to clear its backlog of cases.
Moneyfacts, the financial analyst, said Nationwide and Virgin Money were the only major providers still offering 90pc loans following HSBC’s withdrawal. Some smaller building societies will also offer these loans but only to customers in the local area.
Aaron Strutt of Trinity Financial, a mortgage broker, said: “It is quite surprising that HSBC has not pulled these deals before, given the huge demand from first-time buyers."
Customers who have already applied for an HSBC loan, or have an appointment with the bank booked, will be allowed to proceed with their mortgage. Existing HSBC mortgage customers will also be eligible to transfer to a new small-deposit deal once their fixed rate ends.
HSBC did not say when it expected its 90pc and 95pc loans to return.
Michelle Andrews, of HSBC, said the withdrawal was “not a decision taken lightly” and as the bank was inundated it was putting customers’ property purchases at risk.
She added: “HSBC’s 10pc deposit mortgages were getting harder to access as the bank got busier and it is temporarily withdrawing them until it gets its processing times and systems are back on track.”
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