The Intermediary – August 2025 - Flipbook - Page 13
RESIDENTIAL
Opinion
Why high LTV
mortgages matter
more than ever
W
ith the cost
of everyday
life climbing
and property
prices still
daunting, it’s
lile wonder that many aspiring
homeowners are starting to ask, “Is it
still worth it?”
The dream of owning a home has
always required a degree of sacrifice,
but in today’s climate, it’s not just
about cuing out coffees, avocados
or holiday plans. For many, it’s about
stretching deposits to their limit
and making long-term financial
commitments in a world that feels
anything but predictable.
Despite all this, the aspiration for
homeownership endures. That’s why
the industry, lenders, brokers, and
policymakers alike, must continue on
its quest to find meaningful, practical
answers for those questioning whether
the sacrifices are really worth it.
One of those answers lies in the
availability of high loan-to-value
(LTV) lending, which continues to be a
vital route onto the property ladder for
thousands of first-time buyers.
A tricky balance
The cost-of-living crisis, wage
stagnation, and rising house prices
have made saving a substantial
deposit increasingly difficult. The
recent Stamp Duty changes – which
reduced the nil-rate threshold for
first-time buyers from £425,000 to
£300,000 – have further compounded
affordability pressures. Purchases
between £300,001 and £500,000 now
face a 5% charge, and relief has been
removed entirely for homes priced
above £500,000.
Following this announcement – and
in the subsequent months – data from
Twenty7tec shows that 90%-plus loan-
to-value (LTV) borrowing among firsttime buyers increased from 48.84%
to 49.49%, with nearly half now
relying on high LTV mortgages to get
on the ladder. These products are now
suggested to account for over 22% of
all borrowing, reflecting the financial
stretch many are making just to take
that first step onto the ladder.
For lenders, the challenge lies in
balancing risk with support. While
lending at higher LTVs naturally
requires robust underwriting and
careful pricing, it’s an area in which
smaller, more agile mutuals can make
a meaningful difference. Our close
alignment with borrower needs –
combined with a flexible, innovative
approach, manual underwriting, and
a strong commitment to responsible
lending – puts us in an excellent
position to provide targeted support.
But we also need support in
ensuring that our product offering
reaches the right type of borrower.
In today’s environment, the role of
the mortgage intermediary has never
been more critical. As product types
diversify and economic conditions
evolve, borrowers increasingly need
tailored advice to help them navigate a
market full of options, many of which
they don’t even realise exist.
This is especially true in the
high LTV space, where mortgages
oen involve stricter affordability
assessments, risk-based pricing,
longer terms and even financial
support from family members. Here,
advisers play a vital role in educating
borrowers on the implications of
stretching their deposit and in helping
them choose a structure that supports
long-term financial resilience.
Affordability remains front and
centre in borrowers’ minds. Following
the aforementioned Stamp Duty
changes, first-time buyer activity saw
DAVID LOWNDS
is head of products and
marketing at Hanley Economic
Building Society
a notable shi, with a drop in search
volumes and a shi toward properties
priced below the £300,000 threshold.
However, there are signs of resilience
in the market.
Rightmove’s latest data shows that
while average asking prices dipped
by 1.2% in July, the largest July drop
in over two decades, the number of
property sales agreed was 5% higher
than this time last year.
Simultaneously, lower mortgage
rates have improved buyer
affordability. A 2-year fixed rate now
averages 4.53%, down from 5.34% last
year, saving borrowers almost £150 a
month on average.
However, high LTV lending
isn’t just about numbers, it’s about
opportunity. It’s about giving younger
buyers, single-income households,
and regional renters a realistic path
to homeownership. While it must be
delivered sensibly and sustainably,
especially in light of regulatory
considerations, it deserves a place in
every responsible lender’s toolkit.
As affordability remains under
pressure and homeownership
aspirations persist, it is essential that
lenders continue to develop innovative
products backed with responsible
underwriting.
It’s equally vital that brokers remain
confident and equipped to guide
borrowers through what is oen the
biggest financial decision of their lives.
For many, owning a home still
maers. If we can offer the right
support – through a combination of
products, advice, and accessibility –
then maybe, just maybe, the sacrifices
won’t feel quite so steep aer all. ●
August 2025 | The Intermediary
11
