Loan-to-value (LTV) has always played a huge role in the dynamics of the mortgage market, although borrowers can often be unaware of the activity swings going on behind the lending scenes and the reasons for these.
Getting back to basics for a moment, LTV is essentially the size of mortgage that a lender is prepared to offer borrowers in relation to the value of the property they are looking to purchase or remortgage.
It is expressed as a percentage. For example, if a lender offers a mortgage deal which has a maximum 80% LTV, it means they will lend up to 80% of the property value. And the borrower will need a minimum 20% equity if they are remortgaging or a 20% deposit for a purchase.
Recent years have seen lower lending volumes at higher LTV bands as lenders have significantly reduced their appetite and risk profiles.
Last Summer I remember writing an article around an LTV hokey cokey throughout the mortgage market. Once the housing market ‘reopened’ we saw a number of lenders dip their toes into the 90% LTV market, only to see them swiftly yank them back out after being swamped with business whilst still having to deal with logistic and operational issues.
Since then, the mortgage market ship has steadied somewhat at the mid to higher LTV bands and further good news recently emerged via data from Moneyfacts.co.uk.
This outlined that the availability of all mortgages reached its highest level since April while the number of 90% LTV deals has escalated to June 2020 heights.
Moneyfact’s report showed the number of residential mortgage products rose for the third consecutive month to 2,893.
This was the highest total availability Moneyfacts had recorded since April 2020 (3,192) when the pandemic’s effects began to take hold.
However, the data for January 2021 showed the greatest increase in availability was at 90% LTV where product numbers almost doubled from 72 to 160 – the highest level recorded since June 2020.
The report also highlighted that borrowers with higher levels of equity or deposits had seen an improvement. Availability at 75% LTV rose to 629 deals, the highest level seen since July 2020.
This is positive news for borrowers as increased activity and competition across the 90% LTV landscape will help even more first-time buyers onto the property ladder. And long may this continue.
Book a 1-2-1 consultation with one of our highly experienced advisers about all your mortgage needs. Contact us on 01403 272625 or book a video meeting with one of our specialist mortgage advisers at impactsf.setmore.com or visit https://www.impactsf.co.uk
Dale Jannels is managing director at Impact Specialist Finance
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