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Lack of high LTVs could kill the market, says Sesame

Sesame is calling for lenders to increase loan to values to encourage first-time buyers back onto the property and avoid destroying any housing market recovery.

Sesame managing director of mortgages and general insurance John Cupis says that while the Government-owned banks have recently made some effort to lend at higher LTV, all lenders need to increase their portfolios to include deals at a minimum of 90 per cent LTV, including through intermediaries.

He says historically, 90 per cent LTV was the entry point for customers to provide a sensible commitment to the property, and for the lender to respect that commitment and price accordingly.

He says: “We are in danger of snuffing out the flickering candle of a housing recovery before it has begun to generate some longer lasting light of optimism.

“Make no mistake, first-time buyers hold the key to building the momentum behind a sustainable recovery. However, that will never happen if lenders do not step up to the plate and start lending at higher LTVs. Now is the time to resume normal risk-based lending and to move back to the core competency of assessing risk and demonstrating underwriting skills.”

Cupis says assessing and pricing risk is a core competency for lenders, and now is the time for lenders to step forward and demonstrate their underwriting expertise.

He says: “We live on an island with some of the toughest planning rules in Europe and, with a population of over 60 million people, the long-term demand for housing can only increase.

“We do not expect any recession, however deep, to make British people fall out of love with the dream of home ownership over the longer term. So housing, and the supply of credit to potential homeowners, is fundamental to our society. We need lenders to step up the flow of mortgage funding to first-time buyers – sensible lending to sensible borrowers, at sensible prices.”

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