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.