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Analysis: Managing risk for a high LTV future

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We are now almost a year on from the moment David Cameron announced he would bring forward the launch of the second part of Help to Buy.

Since then, buoyed by the Government guarantee, low-deposit lending has improved considerably, not just from those participating in Help to Buy but by those lenders offering high LTV loans outside the scheme’s parameters.

Previously, many big banks viewed such loans as too risky, not least because of the greater capital requirements. It was left to the building society sector to lead the way in supplying the market with high LTV products – a role it has continued to play strongly.

We have continually drummed home the message that “credit risk mitigants” such as mortgage insurance need to be utilised by lenders not just for the duration of Government intervention but also for the much longer term.

This is all about ensuring the long-term viability of high LTV lending in this country, which is vital if we want to ensure the next generation are able to get on the housing ladder. For lenders looking at their options: acknowledge  and manage the risk curve.

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