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.”