95% LTV products reach post-recession peak

Ryan Bembridge

December 17, 2015

The number of mortgage products at 95% loan-to-value has reached a post-recession high, the latest Genworth / Moneyfacts Mortgage LTV Tracker has found.

The number of 95% LTV products rose from 141 in November 2014 to 260 last month. There were six times as many products available compared to September 2013 (260 vs. 43) before the government launched the Help to Buy mortgage guarantee scheme.

The average rate of products with a 5% deposit fell by 15% from 5.27% in November 2014 to 4.12% last month, the lowest amount since the recession.

Despite the plethora of cheap products available high LTV lending is in decline. There was £1.61bn lent through 90%-95% LTV loans in Q3 2015, down by more than a quarter (27%) from the £2.20bn lent in Q3 2014.

Last month Chancellor George Osborne announced that first-time buyers in the capital will be given a lifeline with the launch of Help to Buy London in the Autumn Statement, which will provide a 40% interest free equity loan.

Simon Crone, Genworth vice president, Mortgage insurance Europe, said: “There is little doubt that the Help to Buy mortgage guarantee has played an important role in rejuvenating the high LTV market.

“However, beneath the surface, it remains a long way short of full health and there is a danger that what we are seeing is a temporary restoration of appetite from lenders thanks in no small measure to government efforts”

He added: “The Chancellor’s Autumn Statement was clear that more needs to be done to help people enter the property ladder and we welcome the new initiatives announced to achieve this aim.

“However, these should not come at the expense of using mortgage guarantees or insurance to ensure wider access to high LTV mortgages. T

“The government scheme has had a positive impact over the last few years and it is dangerous to assume that this would continue without any other scheme in place that incentivises lending and manages risk at the same time.”

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