MBT: Clients’ requirements are being met despite shortfall in higher LTV products

Data Analysis by Mortgage Broker Tools (MBT) has found that, while lending options remain restricted at higher loan-to-values (LTVs), most brokers using MBT Affordability are still being offered mortgages that meet their clients’ requirements.

MBT analysed enquiry data from the MBT Affordability platform for the first six months of 2020 and found that, while lender appetite contracted in March and April, applicants have been offered close to the LTV they have requested throughout the year.

MBT mortgage applicants sought an average LTV of 75% in the first half of 2020, with first-time buyers looking for an average of 81%.

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While options at 85% LTV and above have been limited, the majority of clients have been able to achieve the LTV they have requested, or close to that amount, based on affordability sourcing.

However, on average only 38% of lenders have been able to meet the LTV requested on an application, based on the affordability of the client, showing that carrying out research amongst a large number of lenders has been important for brokers in identifying the most suitable solution.

According to the analysis by MBT, the biggest contraction in the market came in April, when first-time buyers requested an average LTV of 82% but were only offered an average of 76%, leaving an LTV shortfall of 6%.

Home movers in April requested an average LTV of 73% and were offered an average of 66%, leaving a shortfall of 7%.

On the other hand, remortgage customers have consistently been offered higher LTV mortgages than they have requested throughout the year.

Tanya Toumadj (pictured), CEO at Mortgage Broker Tools, said: “There have been many headlines about the limited availability of high LTV mortgages and the market is likely to remain restrictive for clients with a small deposit for quite some time.

“But in reality, most mortgage applicants are still able to borrow close to the LTV they request.

“I think there are two takeaways from this. The first is the power of data to understand the full picture of a situation and the second is that there are options available for your clients – if you know where to look.

“On average, only 38% of lenders have been able to meet the LTV requested on an application based on the affordability of the client.

“This means that a lot of brokers who may have only tried a handful of options could well have come up short.

“While those who have made use of a powerful research platform like MBT Affordability would have had a much better chance of identifying the right solution.

“This explains why we have seen such a consistently low LTV shortfall on enquiries being processed through the platform.”