Second Lender scraps 125% LTV scheme

[CoverItAll]

"Mortgage Stategy" announces:

"Coventry has followed Alliance & Leicester and scrapped its 125% LTV range.

At the end of this week the building society will no longer offer the MOREgage range through its intermediary arm Godiva Mortgages.

The products combined a mortgage and an unsecured loan and were available at either 100% or 125% LTV.

The products were in direct competition with A&L's PlusMortgage, Northern Rock's Together range and BM Solutions Mortgage Plus products.

The building society says demand for the products was very low.

Colin Franklin, managing director of Godiva, says: "These products have been a useful addition to our portfolio and have performed well.

"During 2007 we saw a steady reduction in the demand and certainly the number of applications we have accepted has reduced."

He adds: "MOREgage applications have reduced to a negligible level and it is no longer cost effective to maintain the additional underwriting processes for these higher LTV loans.“

The news will increase pressure on Norther Rock to abandon its Together range, following a recent call by a Liberal Democrat peer for the stricken lender to scrap the products.

In a debate in the House of Lords, Lord Newby, Liberal Democrat spokesman for the Treasury asked questioned whether the high LTV products were “doomed to fail from the start” as from the outset the borrower owes more than the value of the property."

[Welsh Boy]

John

That`s interesting, how about negative equity secured loans. Tony

[chelle]

hi - i agree - what about the 2nd charge loans - i have a picture loan which puts me into negative equity of 60k!

What will happen to this market?

Better still what is happening to picture finance now they haved closed to new business?