Share of high LTV mortgages hit record low in Q4, FCA finds

Share of high LTV mortgages hit record low in Q4, FCA finds
 Credit: Jason Alden/Bloomberg

The share of mortgages advanced with an LTV above 90 per cent fell to a 13-year low in Q4 2020, according to the Financial Conduct Authority (FCA).

Mortgage lending statistics for Q4 2020, published by the regulator today (March 9), showed the share of advances with LTV ratios exceeding 90 per cent fell to 1.2 per cent.

The figure is 4.5 percentage points lower than a year earlier and the lowest level since records began in 2007.

Mark Harris, chief executive of SPF Private Clients, commented: “High loan-to-value mortgages were harder to come by as lenders reined back on 90 per cent and above. 

“The government’s decision to introduce a mortgage guarantee to encourage lenders to offer 95 per cent mortgages once more will make a difference to first-time buyers and others who simply can’t raise a significant deposit.”

Last week the Chancellor confirmed the launch of a mortgage guarantee scheme for small deposit homebuyers, amid a dramatic decline in the number of 95 per cent LTV mortgages available since the pandemic.

Karen Noye, mortgage expert at Quilter, said: “The statistics show in Q4 2020, the number of 90 per cent LTV mortgages was the lowest on record as lenders shied away from higher risk borrowers as a result of the precarious economic situation we now find ourselves in.

“It’s therefore not surprising that Sunak during the budget introduced the new Help to Buy mortgage guarantee scheme to throw a bone to the first time buyers who have had the rug pulled from under them since the pandemic started due to the surge in house prices and lack of high LTV deals.”

While high LTV lending fell to a record low, the FCA’s statistics also showed the value of new mortgage commitments reached £87.7bn.

The figure is a quarter (24.2 per cent) higher than a year earlier, and the highest level since Q3 2007.

According to Harris, the figures illustrated the “strength of the uptick” in the housing market.

He said: “The experience of lockdown and subsequent desire for more space, combined with the stamp duty holiday and record low interest rates, have persuaded many to take the plunge and move.”

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