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IMLA: Some lenders would prefer looser LTI and stress tests to enable high LTV lending

  • 04/03/2021
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IMLA: Some lenders would prefer looser LTI and stress tests to enable high LTV lending
The Intermediary Mortgage Lenders Association (IMLA) has criticised the government for its stamp duty holiday extension and questioned how effective its mortgage guarantee scheme will be.


Responding to chancellor Rishi Sunak’s Budget delivered yesterday, the trade body noted the stamp duty holiday extension had not taken a more nuanced approach and as a result the industry would need to continue managing buyers’ expectations.

“IMLA asked specifically for added flexibility to the scheme’s deadline to prevent harm to those who stood to miss out, while also avoiding a simple extension of the scheme that would only have postponed the inevitable cliff-edge impact,” said Kate Davies, executive director of IMLA.

“That has not been included – so it will remain important for estate agents, intermediaries, lenders and conveyancers to continue to manage consumers’ expectations in the light of what may continue to be a very busy period between now and the end of June.

“As the weeks go by, those who have not already started the process of buying a home will become increasingly unlikely to complete their purchase by that first deadline. We may also see prices rise as activity remains buoyant,” she added.


Predecessor had low take-up

Davies was also more circumspect about the 95 per cent loan to value (LTV) mortgage guarantee scheme, noting that it would help some lenders to return, but questioned its effectiveness.

The scheme is designed to only be available until December 2022 and has just £3.9bn worth of guarantees available.

It has already attracted commitments from at least six major lenders and has been welcomed by brokers.

“We shall need to digest the detail – and assess how this scheme differs from its predecessor, which attracted relatively low take-up, with buyers accessing just £2.3bn of the £12bn of guarantees offered,” she continued.

“Some lenders would prefer a simpler model of high LTV lending, which could be enabled via a revision of the current loan to income and stress testing requirements.”

The trade body emphasised that more was needed to be done to support the environmental impact of the housing sector.

“Interestingly, the chancellor’s announcement was silent on specific plans to improve the energy efficiency of Britain’s housing stock.

“Green Bonds can only go so far, and more incentives will be needed to help homeowners overcome the existing barriers to making home improvements, such as the high cost of effective remedial work and the fact that pay-back periods may be unrealistic,” Davies concluded.



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