Lender urges industry to bring 95% LTV lending back
Mortgage lenders need to step up and offer 95% loan-to-value mortgages to help tackle the housing crisis, specialist finance lender Atelier has urged.
Some 90,000 new build homes are being left empty across the UK, which the lender blamed on the lack of high LTV lending.
While some mortgage lenders, such as Newcastle Building Society, have re-entered the 95% LTV market, figures from the FCA show that in the second quarter of 2023 only 4.45% of new mortgages had a LTV ratio of above 90%.
Atelier argued that fears from lenders around 95% LTV mortgages falling into negative equity are overstated, given that house price falls have been minor this year.
Chris Gardner, joint chief executive at Atelier, said: “Hard-working individuals who cannot bridge the deposit gap are left at the mercy of the rental market, adding further fuel to the current rental crisis and depriving individuals of home ownership.
“For all of the talk of a restrictive planning system stifling the property market, the real culprit is in fact restrictive mortgage LTVs. As long as they remain low, the pool of property purchasers will be limited.”
“The solution is simple but we cannot wait for the government to act. Higher LTVs from mortgage lenders would quickly place empty new-build properties into the hands of those they were originally built for and unlock the current market stasis.”
The lender added, that while the government’s Mortgage Guarantee Scheme is attempting to plug this deposit shortfall, take-up amongst lenders remains minimal.
With the latest figures from Halifax revealing that the average UK house price now stands at £281,974, standard loan to value ratios of 75% require buyers to assemble a deposit of £70,493.
Such a sum is beyond the reach of many, especially first-time buyers whose budgets have been eroded by inflation, meaning tens of thousands of properties marketed at those looking to buy their first home are left empty. Without a flow of new buyers, the residential property market remains stagnant.
Gardner added: “While government support is always the focus of the first-time buyer debate, it is often not enough to meet the needs of first-time buyers who can’t get a foot in the door.
“For the benefit of everyone, the market needs to lend a helping hand and mortgage lenders are sitting on the solution.
“We all know that mortgage lending is one of the least risky types of lending. In tough economic conditions, every possible spend is cut before mortgage payments are impacted. Lenders should take action now.”