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CML: Members against widespread 100% LTV mortgages

The return of widespread 100 per cent LTV mortgages to the market looks increasingly unlikely after a survey by the Council of Mortgage Lenders failed to find a single respondent strongly in favour.

Lenders admitted to the CML as part of the body’s end of year report that the market was too skewed towards 60 per cent LTV mortgages but none saw a strong case for returning to widespread 100 per cent LTV products.

A number of lenders did tell the CML they would like the option of 100 per cent LTV mortgages in order to offer them to good existing borrowers trapped with little equity.

According to the survey: “Capital requirements are now – rightly – more stringent on higher LTV lending and high LTV in the past didn’t necessarily go hand in hand with high loan-to-income ratios which is what happened immediately pre-crisis.”

For highly geared borrowers, respondents were favourable on the suggestion that long-term fixed rates could be effectively utilised.

However, a number of barriers still exist which may prevent the successful use of long-term fixes. High costs associated with early redemptions on fixes make borrowers feel ‘trapped’ and the CML cites a “culturally embedded lack of value that UK consumers seem to place on certainty.”

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  • George Williamson 23rd December 2012 at 12:18 am

    A failure to provide 100% mortgages is an admission by lenders that they are crap at underwriting mortgages – unless of course this is being driven by the FSA, which is more likely to be the truth.

    Until the Credit Crunch, there have always 100% mortgages in Scotland since at least 1985 and 95% mortgages in the UK since the end off World War 2 – that is more tha 67 years!

    Those that meet clients understand risk, those that underwrite mortgages read forms, those the work for the FSA read other peoples forms – the further you are away from the client, the less you understand – it is that simple!