AMI figures showed that, in September 2006, the average LTV for a £125,000 home was 75.9% compared to an average loan of just 64.3% today.
In contrast, the average LTV on a £500,000 home has only dropped from 55.6% to 51.8%.
Robert Sinclair, director of AMI, said: “This might be the most selective credit crunch in history.”
In its Quarterly Economic Bulletin, AMI has also predicted that the mortgage market will remain “flat and benign” over the coming months due to limited funding.
House prices will remain flat overall despite significant regional variations, as deposit size and credit history remain the biggest barriers to expanding the market.
Sinclair said it remained crucial to restore the buy-to-let market in order to meet demand.
Sinclair added: “The Spending Review and debates around quantitative easing indicate that maintaining the balance between fiscal integrity and ensuring economic recovery remain key issues for policy makers.
“The limited funding available for mortgage loans appears capable of sustaining the purchase market and under-pinning property prices. As long as base rates remain low remortgaging and fixed rates don’t look attractive.”
However, he said that once interest rates move, fixed rate remortgage deals will take up the limited funds which are available, so impacting on the wider market as less funding is available for property purchases.
