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Borrowers call for increase in lending ratios

An increasing number of mortgage borrowers are demanding higher loan to

value ratios, according to research by The Mortgage Business.

Just over a third of the brokers who were questioned in the survey

commissioned by the Bank of Scot- land-owned firm responded that their

clients want bigger loans and smaller deposits.

TMB says this is potentially a great cause for con cern as many of these

cli ents do not take out protection policies on their properties.

The Government recently issued a warning about the need for the public to

have mortgage payment protec tion insurance. The majority of IFAs said the

main rea son for the demand in higher LTVs is the current boom in property


They say people have not been able to build up savings sufficiently to

cover the higher deposits so they need to borrow an increasingly higher


First-time buyers are identified as being less inclined to save a deposit

before entering the housing market.

TMB says another cause for concern over lending is the claim by FSA

chairman Howard Davies that lending multiples are on the increase.

The Council of Mortgage Lenders said its figures showed this was not the

case and that people were consistently borrowing just over twice their


TMB managing director Mark Charlesworth says: “I think it is likely that

the customers who are looking for higher loan to value ratios are

approaching brokers. This puts a big onus on brokers and intermediary

lenders to make sure that potential borrowers are fully aware of the risks

if interest rates rise or they are unable to meet their payments through

accident, sickness or unemployment.”

The research was conducted by Dialogue Market Research among 100 brokers.


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