Share of LTV mortgages hits record high in fourth quarter, FCA says
The share of advanced mortgages with an LTV above 90% fell to its lowest level for 13 years in the fourth quarter of 2020, according to the Financial Conduct Authority (FCA).
Mortgage statistics for the fourth quarter of 2020, released by the regulator today (March 9), showed that the share of advances with LTV ratios above 90% has fallen to 1.2%.
This figure is 4.5 percentage points lower than a year earlier and the lowest level since records began in 2007.
Mark Harris, Managing Director of SPF Private Clients, commented: “High value mortgages were harder to come by as lenders limited themselves to 90% and above.
“The government’s decision to introduce a mortgage guarantee to encourage lenders to once again offer 95% mortgages will make a difference for first-time buyers and others who simply cannot raise a large deposit.
Last week, the Chancellor confirmed the launch of a mortgage guarantee system for buyers of small deposits, amid a dramatic decline in the number of 95% LTV mortgages available since the pandemic.
Karen Noye, Mortgage Expert at Quilter, said: “Statistics show in Q4 2020 the number of 90% LTV mortgages was the lowest on record as lenders avoided high-risk borrowers due to the precarious economic situation that we now see. ourselves.
“So it’s no surprise that Sunak, when budgeted, introduced the new Help to Buy mortgage guarantee system to throw a bone out for new buyers who have had their carpet ripped off since the start of the pandemic due to the soaring housing prices and scarcity. high LTV offers. “
While high LTV loans fell to an all time high, FCA statistics also showed that the value of new mortgage liabilities reached £ 87.7 billion.
This figure is a quarter (24.2%) higher than a year earlier, and the highest level since the third quarter of 2007.
According to Harris, the numbers illustrate the “strength of the upswing” in the housing market.
He said: “The experience of foreclosure and the subsequent desire for more space, combined with the stamp duty holiday and historically low interest rates, have persuaded many people to take the plunge and move on. thing.”
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