Quantity of 90% LTV mortgages unlikely to increase

People looking for cheap mortgages have been told that there is unlikely to be an increase in the number of 90 to 95 per cent loan-to-value LTV products available in the near future.

Ben Wilkie, editor at What Mortgage, said that the reluctance of banks to offer higher LTVs is the concern that it could cause customers to end up in negative equity should house prices continue to fall.

Another reason is that "new rules regarding capital ratios for banks mean that it is much more expensive for them to lend at high loan-to-values – especially if you go over 90 [per cent LTV] – than it is to lend at 70 or 80 per cent", he explained to those seeking cheap mortgages.

His comments follow finding from Santander which revealed that Brits expect to take an average of 3.3 years to build up a deposit for their first home.

Mr Wilkie added that although houses are cheaper, stricter criteria and the need for bigger deposits mean that first-time buyers are still finding it hard.

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2011-05-05 13:19:06 © Moneyextra.com