Virgin Money has announced it is temporarily withdrawing its 95% mortgages from the market.

The lender said it is pulling the 5% deposit deals for new customers in order to review its proposition and ‘monitor market conditions’.

The 95% mortgages will still be available to existing Virgin Money borrowers who want to switch products.

Jonathan Burridge of mortgage broker, We Are Money, said he was worried about the lender’s comment about market conditions. “Are we going to start to see low deposit mortgages disappear like we did at the start of Covid?”

Gindy Mathoon, founder of Create Finance, added: “It’s a bit hasty for Virgin to do this and probably doesn’t send out a great message. This shows that they do not have confidence in the market and expect a bleaker outlook especially around house prices.”

Riz Malik, director at R3 Mortgages, suggested that Virgin won’t be the last to limit high loan to value lending. He said: “Going into 2023, the options for higher loan-to-value (LTV) borrowing are going to diminish.

“With house prices expected to fall, lenders will be looking to limit their risk, especially for borrowers with small deposits. Those still in the market will want a premium as competition decreases.”