Return of the higher Loan To Value mortgage PDF Print E-mail
Mortgages
Tuesday, 23 February 2010 11:13
The mortgage market is showing signs of a rapid return to higher value lending with the number of providers offering fixed-rate loans with a 90% LTV or higher nearly doubling in the last 12 months, new research from MoneyExpert.com shows.

Its analysis shows there are 147 fixed-rate products available for those wishing to borrow 90% or more of the value of their property. This represents an 88% increase on the 78 products available this time last year.

The fixed-rate mortgage market as a whole has expanded considerably, by around 46% in terms of products available, since February last year but these latest figures suggest a growing inclination towards higher LTV lending. The average LTV on a fixed-rate mortgage is now 76.8%, up from 75.7% 12 months ago.

Borrowers looking for a high LTV on a variable rate mortgage will have fewer options. The number of variable products available has tripled since this time last year, but the number of high LTV products (those with an LTV above 90%) has shown just a modest increase from 43 in 2009 to 51 now.

Pierre Williams, Head of Research, MoneyExpert.com, said: “For those looking to borrow a sizeable percentage of the value of their home this is clearly good news. Lenders have been risk averse in the past year and have shied away from high LTVs. Measured optimism over the housing market, though, seems to be encouraging higher value lending.

“It’ll be interesting to see how other provides react in the coming months. We’re some way off the flurry of 100% deals of previous years and that is a good thing to some extent but it seems that door is opening up.”

The increase in high LTV mortgages is not a trend excluding first-time buyers, often those for whom finding a large deposit is hardest. Although a significant number of 90% deals are not available to those waiting to get on the housing ladder, the number that are has increased from 75 12 months ago to 108 now.

As a further indication of increased confidence in the market a number of providers have gone so far as to re-introduce 100% deals. These offers, from the likes of Natwest, RBS, and Saffron Building Society, are currently only available as product transfers, effectively for customers coming to the end of a deal but unable to re-mortgage elsewhere. There were no such 100% deals available 12 months ago.

Borrowers relying on higher LTV products will face paying higher rates on the deal. The average fixed-rate mortgage product is currently at 5.4%, well below the 6.3% average for deals with an LTV of 90% of higher. The same applies to a lesser extent on variable-rate products where the average rate is currently 3.9%. For variable products with an LTV over 90% the average rate is 4.8%.


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