Lenders regain appetite for high-LTV lending

Access to the mortgage market is widening as lenders rediscover their appetite for higher-LTV lending.

Lenders have partly been encouraged by Government measures such as the Help to Buy mortgage guarantee scheme, according to the Council of Mortgage Lenders (CML).

The data comes as the most recent Bank of England credit conditions survey, published in January, reported that spreads were narrowing and firms were showing a strengthening desire to build market share.

The CML said overall credit quality remains good, with the Bank reporting that default rates had fallen significantly in the final quarter of last year.

The Bank’s data also showed that mortgage rates fell significantly over the last year, with the largest drops on longer-term fixed-rate mortgages. 

The average 10-year fixed-rate mortgage to 75% LTV fell 70 basis points to 3.34% over the year to November, the latest date for which Bank figures are available.

Two-year fixed-rate mortgages fell 27 basis points to 1.90%.

The availability of secured credit to households increased again in the final quarter, most noticeably for those borrowing at LTVs of 75% or more.

Similarly, new figures from Moneyfacts.co.uk show the largest reductions in advertised rates are for borrowers seeking higher-LTV mortgages.

Average rates fell across the board in the 12 months to January 2016, with the largest reductions – of almost 80 basis points over the year – on 90% mortgages.

Charlotte Nelson, finance expert at Moneyfacts, said: “Borrowers of all kinds are able to benefit: while those with a bigger deposit are still able to secure the lowest rates, those lower down the housing ladder have been able to see truly dramatic reductions.”