High LTV mortgage lending makes a comeback

Jessica Nangle

September 11, 2017

The rise in the percentage of mortgages written at 90% LTV shows risk is returning to residential property lending says Lendy.

Data from the Bank of England shows that 4.5% of residential mortgages were written at 90% LTV or more during the first quarter of 2017 compared with 3.4% a year earlier.

Liam Brooke, co-founder of Lendy, said: “Banks may be drifting back towards more risk taking in the mortgage market.

Mortgage lending dipped last decade after 2007 crash

“Keeping a firm handle on LTVs is vital to control risk, but the data from The Bank of England suggests banks have decided to move up the risk curve in the search for higher yields.

“Concentration risk is a real concern for property investors, and diversifying away from an equity-only portfolio can help spread the risk in a way that direct investment cannot.”

High-risk mortgage lending of this type fell during the credit crunch, with just 1.5% of lending of this kind being seen in Q4 2009.

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