In the light of First Direct's decision to suspend offering mortgages to new customers, Platinum Property Partners and their mortgage provider of choice, Professional Mortgage Services, give their view on the future of the mortgage market in the UK.

The shockwaves from the global credit crunch are continuing to ripple through the mortgage market and it seems that lenders are withdrawing and changing products on an almost daily basis. And as we've become accustomed to mortgages running alongside the Bank of England base rate, the fact that the last two percentage cuts have made virtually no impact at all on our repayments has come as something of a shock. The lack of correlation is because rates at which banks lend to each other has continued to rise, putting the squeeze on lenders and forcing them to take an increasingly cautious attitude to risk.

90% LTV to return...eventually

A couple of weeks ago the last 90% loan to value UK buy-to-let mortgage product was withdrawn, and the maximum LTV currently available for any mortgage is 85%. No one is clear how long this will continue to be the case, but PPP's mortgage broker of choice, Andrew Stanway, of Professional Mortgage Services, is confident that 90% mortgages will once again become available when the turmoil in the credit market has abated.

In the short term this development means that investors will simply have to accept a higher level of capital input when purchasing UK property, which does impact adversely on returns. However, we see this as a temporary cash flow issue and not a long term problem. Our advice to PPP franchise partners and mentoring clients who are following our model for cash positive investing in the UK is to take out 85% buy to let mortgage products with no tie-ins or redemption penalties, so that as soon as 90% buy to let mortgages once again become available, the capital can be extracted and re-utilised.