Searches for 95% LTV mortgages have increased by nearly eight times since the start of the year, according to research published by Mortgage Broker Tools (MBT).

Data from the MBT Affordability platform revealed that searches for 95% LTV mortgages were more than 7.6 times higher in March this year than they were in January.

As a proportion of all enquiries, MBT stated that demand for 95% LTV has actually fallen in the last year. In March, searches for 95% LTV mortgages accounted for 4.9% of all searches, compared to 14.1% the same time in 2020.

However, to date in April, this percentage has increased to 10%, suggesting levels are bouncing back to those seen last year.

MBT CEO, Tanya Toumadj, said that the data from MBT Affordability tells “a very clear story”.

“There is strong and growing demand for high LTV mortgages and an increasing number of products available to meet that demand,” Toumadj commented. “However, it is still difficult for customers to prove eligibility for those products as, when it comes to higher LTV loans, lenders take a much stricter approach to affordability.

“We know that many lenders restrict the maximum loan to income ratio they are prepared to lend on higher LTV mortgages, and data from MBT Affordability shows that the gap between the average minimum and maximum loan size available has narrowed significantly.

“This spread was £45,000 in March 2021, down from £130,000 in March 2020. However, there is still a spread and so thorough research of all the options is the only way for brokers to ensure they are advising on the most suitable options for their clients.”

In January, the MBT Affordability platform indicated there was no lender able to lend on 48% of enquiries above 90% LTV, but this had fallen to 17% in March.

MBT suggested this is a “positive trend” as the market opens, but a lot of these enquiries remain unaffordable as customers are unable to achieve the loan amount they request on 45% of cases.

In March this year, the remaining 38% of cases above 90% LTV were considered to be affordable – customers were able to achieve the loan size they requested – and this is expected to increase as more lenders move into the 95% space throughout April. By comparison, in March last year, 70% of cases were considered to be affordable.

Toumadj added: “Our data has also shown that, while 95% LTV mortgages tend to take the headlines, they represent a small but significant part of the market. Availability of 95% LTV products is improving every week but we are seeing that more clients are missing out on access to these products due to affordability and criteria.”

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