High LTV lending on the rise

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The proportion of mortgages with a loan-to-value above 90% increased to 4.5% in the first quarter of 2019, up from 3.3% a year before, the Bank of England’s Mortgage Lenders and Administrators Statistics show.

This means that high LTV lending is at its highest ratio since the second quarter of 2017.

Keith Haggart, managing director of lifetime mortgage provider Responsible Lending, said: “The growth in lending to buyers with less than a 10% deposit points to continuing financial pressure on first-time buyers, whose opportunistic streak means they are likely taking advantage of high LTV mortgages becoming more widely available.

“There is also a developing trend which means buyers are borrowing over longer periods, and this can drive up the LTV, helping them to keep more cash in their pocket.

“The number of first-time buyer mortgages hasn’t really changed on an annual basis, along with the amount borrowed.

“This means that what first appears to be a case of first-time buyers shrugging off the Brexit gloom and borrowing more, is actually really just a case of putting down smaller deposits. This may be because they want more flexibility in their household finances.”

Gross mortgage advances stood at £63.3bn in the first quarter of 2018, 1.4% higher than a year ago.

Meanwhile the value of mortgage lending agreed to be advanced in the coming months has risen by 4.5% year-on-year to £63.8bn.

The Bank of England also found that the proportion of loans in arrears fell to 0.99%, the lowest since the series began in the first quarter of 2017.

Mark Pilling, managing director of Spicerhaart Corporate Sales, said: “It is good news that arrears remain historically low – and in fact are continuing to fall – but these statistics do not necessarily mean that people are no longer experiencing financial difficulties.

“In fact, it is more a sign that lenders are doing all they can to help borrowers who are struggling to avoid arrears and repossessions.

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Written by: Houseladder