High LTV lending plunged to just 2% of all new advances in Q4 2009
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New mortgage lending of more than 90% LTV accounted for less than 2% of new advances in Q4 2009, figures from the Financial Services Authority reveal.
This figure was down from the 6% of new lending at this LTV seen in Q4 2008.
The use of higher LTVs along with high income multiples continued to decrease in Q4 2009, with these facilities accounting for less than 1% of new lending.
The FSA’s figures are based on the activities of some 300 regulated mortgage lenders and adminis-trators, and their business volumes in Q4 2009.
Overall, new advances in the period totalled £41bn, a rise of 2% on Q3 but 8% less than the £45bn advanced in Q4 2008.
Lending for house purchase represented an increasing share of new lending, accounting for 62% of new advances and 63% of new commitments in the quarter.
But the low LTV trend could be reversing in 2010, with figures from Moneyfacts.co.uk indicating that higher LTV mortgages are starting to reappear as lenders relax their criteria.
On April 1 2009 there were just three deals available at 95% LTV compared with 13 today, while there were 71 deals at 90% LTV in April 2009 compared with 152 today.
Michelle Slade, analyst at Moneyfacts, says that by increasing the number of mortgages they have available lenders are showing they are open for business.
She says: “It is pleasing to see that the average mortgage rate is continuing to fall while deposit requirements are easing.
“House prices appear to have bottomed out, meaning higher LTV mortgages are a less risky option for lenders.”
Slade acknowledges that for a long time borrowers with small deposits have had few options.
She adds: “Many will be hoping this positive trend continues, with increased competition reducing the cost of high LTV mortgages. Only then will first-time buyers be able to return to the market.”
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