Naive to think 100% plus LTVs will not return says economist

Natalie Martin, online editor from Brussels
21-Nov-2008
It would be naive to think that 100% plus LTVs will not return to the UK market says Andrew Lilico, managing director of UK consultancy firm Europe Economics.

Speaking at the European Mortgage Federation Annual Conference 2008 today in Brussels, Lilico says borrowers in the UK who have taken out 125% LTVs in the past will be stuck when they come to move.

This will in turn force lenders to increase LTVs to stop further repossessions he says.

He also believes there could be a shift in who takes responsibility when it comes to regulated products.

He says: “Mortgage regulation was introduced so those that were regulated could give trusted advice and wear a regulatory badge which was supposed to mean that consumers could trust them.

"The trust came through the regulatory badge, many consumers did not understand what they were agreeing to.

“Many consumers now need to understand what it is they are taking out and take some responsibility.”

He also hinted that lenders may be called into line by the government over repossessions.

He says: “There is political interest in limiting repossessions. The government may limit lenders' ability to repossess.”