Lenders must grant 90% LTV if house prices are to go up

Demand for property is not weak. Lenders are restricting the availability of funds, so purchasers are not able to obtain mortgages at reasonable interest rates for loans that are more than 75% LTV.

Lenders’ valuers continue to downvalue properties so the fall in house prices is a self-fulfilling prophecy. This will continue to be the case until lenders decide to grant 90% LTV mortgages.

I say grant rather than offer, as it appears that the lenders offering 90% LTV mortgages are doing so merely as a sop to the government, but then not actually offering many deals at 90% LTV. Still, I guess it keeps Prime Minister Gordon Brown happy.

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