Loan To Value Levels Continue To Increase
Since the start of the credit crunch, one of the greatest obstacles facing someone looking for a new homeowner loan, particularly for first time buyers, has been that of raising a sufficiently large deposit in order to meet banks and building societies tightened lending criteria with regard to loan to value ratios.
With many lenders only offering a maximum loan to value of 75 per cent or even less, it has been impossible for many potential home buyers to get the home owner loan, or mortgage they require to get themselves onto the housing ladder.
But the number of higher loan to value home owner loan products is starting to increase significantly, as lenders start to see property prices steadily rise, allowing them to relax their loan to value criteria.
According to the latest research from moneyfacts.co.uk there has been a sharp increase in high loan to value products entering the market over the course of the last month alone. By the end of November, there were a total of 116 different loan products which offer 90 per cent loan to value, up from 101 in the previous month and there are also now 254 loan products at 85 per cent loan to value, compared with 226 last month.
Michelle Slade of moneyfacts.co.uk said “Slowly but surely we are finally seeing competition returning to the mortgage market. Lenders have adjusted to the post banking crisis world and are starting to relax their lending criteria. In the last month, we have seen lenders increasing the loan to values up to which their existing deals are available, or launching new deals at higher loan to values.
Many house price indices are now showing a rise, meaning that the risk of higher loan to value loans has lessened. While the best deals remain for those with a 40 per cent deposit, those with smaller deposits are finally seeing rates starting to come down.”
