It’s not to say there aren’t high LTV loans available, but they are certainly not in abundance.
Just crunching some product numbers based on the Halifax House Price Index and its average UK house price of £250,457 in October will show you what I mean.
For all products across all terms, first-timers seeking a 95 per cent loan based on that average would have their ‘pick’ of just 15 products, according to Money Saving Expert.
At 90 per cent it rises to 41, and at 85 per cent it more than triples to 158.
You can therefore understand why the current focus is on 85 per cent LTV and why potential clients are being asked to see if they can boost their deposit levels in order to get to this.
What would that entail?
Well a five per cent deposit at that Halifax average house price would be just over £12,500, 10 per cent would be just over £25,000, and 15 per cent would be just over £37,500.
If you’re at the 95 per cent deposit level, how do you pull together £25,000 at short notice?
It’s no wonder families are being called upon more and more.
By the way, in just one year, those deposit levels required have gone up by over £800 for five per cent deposits, over £1,750 for 10 per cent, and over £2,600 for 15 per cent.
Again, you can see why there tends to be urgency to make property dreams happen, and that’s without even talking about the current stamp duty saving available.
New blood needed
So, while it’s understandable that – with large amounts of business anyway – the market is focusing on the here and now, we need to look forward and address the ongoing high LTV product shortage.
Without new blood coming into this market we are likely to see a big drop-off in activity.
As an optimist, I sincerely hope lenders will reset themselves in January and will hopefully see the requirement to be active in the higher LTV space, the benefits it brings, and the necessity for our marketplace.
However, we might not be able to rely on the market healing itself, and the need for government intervention may well get bigger and bigger.
Can families keep coming to the rescue? Probably not.
And this will be brought into sharp context when – in all likelihood – we have a whole swathe of people who couldn’t get onto the housing ladder, even when there was a stamp duty holiday in place designed to help them do just that.
Johnson muddying water
The government, or rather prime minister Boris Johnson himself, has dipped his toe into the water but I sense he is muddying it slightly, by conflating high LTV with long-term fixed rates.
These are separate issues and probably need to be treated as such.
Which means high LTV lending has to be encouraged in the future, and then some.
Whatever is decided, action will be required quickly.
Otherwise the future will become the present very quickly and the transactions normally fuelled by good high LTV availability will inevitably dry up.