Demand for high LTV mortgages surges eightfold

Demand for high LTV mortgages surges eightfold
Credit: Simon Dawson/Bloomberg

Searches by brokers for 95 per cent LTV mortgages have increased nearly eightfold since the start of the year, according to Mortgage Broker Tools (MBT).

Data from the technology provider found searches for 95 per cent LTV mortgages were more than 7.6 times higher in March when compared to January, accounting for 4.9 per cent of all searches last month.

While the share of searches for 95 per cent LTV mortgages was around two-thirds lower than in March last year, when it was 14.1 per cent, it increased to 10 per cent to date in April.

Lenders began returning to the 95 per cent LTV market in March, with more expected to offer high LTV deals as the government’s guarantee scheme opens to new 95 per cent mortgages from April 19.

Tanya Toumadj, chief executive officer at Mortgage Broker Tools, said: “There is strong and growing demand for high LTV mortgages and an increasing number of products available to meet that demand.

“Availability of 95 per cent LTV products is improving every week but we are seeing that more clients are missing out on access to these products due to affordability and criteria.”

According to MBT, one in six enquiries (17 per cent) above 90 per cent LTV could not be matched with a lender in March, down from half (48 per cent) in January.

But Toumadj said it was still difficult for many customers to prove eligibility, due to lenders’ stricter approach to affordability on higher LTV loans, such as restrictions on maximum loan-to-income ratio.

Kevin Dunn, director at Furnley House, commented: “[If] you wish to borrow 95 per cent directly from the lender, the credit scoring can become more difficult as you’re likely to need an ‘A1’ credit rating.”

Dunn added: “Wherever possible we would still encourage clients to save and provide a 10 per cent deposit, [or] 15 per cent if that is possible. This should provide access to more lenders, more competitive rates and potentially a better chance of passing the lenders' credit scoring to borrow the money required.”

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