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Lenders seek FCA permission to re-enter high LTV mortgages at same time

  • 18/11/2020
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Lenders seek FCA permission to re-enter high LTV mortgages at same time
Mortgage lenders are seeking permission to stage a simultaneous return to high loan to value (LTV) lending without breaching competition rules, Mortgage Solutions can reveal.


The Intermediary Mortgage Lenders Association (IMLA) has asked for guidance from the Financial Conduct Authority (FCA) on whether current rules will allow multiple banks to return to 90 per cent lending at the same time.

There are currently only a handful of banks and building societies offering mortgages to borrowers with a ten per cent deposit or less and Accord joined those ranks earlier this week.

Some regional building societies will lend to borrowers with just a five per cent deposit but they impose regional restrictions to deal with both risk and demand.

Lenders such as TSB, Coventry Building Society and Platform have been dipping in and out of the 90 per cent LTV market to cope with the high volumes of applications from borrowers with a ten per cent deposit but are forced to retreat, sometimes within days.

Kate Davies (pictured), executive director at IMLA, said: “Lenders recognise the difficulties facing borrowers with smaller deposits and they are eager to return to the high LTV market.

“However, one of the biggest challenges they face is that when returning to sector by themselves they can be overwhelmed by demand from buyers eager to press ahead with their homebuying journey in a bid to benefit from the stamp duty holiday.

“This is acting as a major barrier to lenders returning to the high LTV sector, but one solution could be to allow lenders to cooperate in a bid to return to the market together in order to better manage demand.”

There are concerns among lenders, however, that a collective decision could breach competition rules in the mortgage market.

Davies added: “IMLA has raised the issue with the FCA to find out if there is any flexibility in the rules, given the extraordinary circumstances caused by the Covid crisis which would allow lenders to return to the market in a coordinated manner that will ultimately support better outcomes for borrowers.”

The FCA has been approached for comment.


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