LTV limitation is a "blunt tool"

Date:Monday 22nd March 2010
Author: Susanna Kavka

Bernard Clarke, communications manager for the Council of Mortgage Lenders, spoke against recent proposals made by the Financial Services Authority, which stated mortgage lenders should impose a limit on loan-to-value (LTV) ratios and thereby restrain housing price increases.

But Mr Clarke feels this course of action would do more to prevent first-time buyers putting a foot on the property ladder.

He said: "We think it is a blunt tool in terms of addressing the real sources of consumer detriment. We do not favour credit control as it risks excluding some consumers."

Figures published by Moneyfacts.co.uk show at the beginning of this month there were almost 1,798 mortgage deals available - a 68 per cent increase on February last year - which required deposits from zero to 40 per cent.

Incidentally, Santander has increased its maximum LTV ratio on new-build houses from 80 to 90 per cent for first-time buyers.