Hampshire Trust Bank is resuming lending at 75 per cent loan-to-value, but stressed that it would only do so on “the right type of deals”.

Last month HTB cut LTVs to 60 per cent, as managing director Charles McDowell warned of the difficulty in accurately determining property valuations in a frank email to brokers.

Today McDowell has updated brokers, saying that the lender is bringing back 75 per cent LTV deals with immediate effect, but only for “the right properties, the right yields and the right borrowers”.

He says that with the economy expected to contract “massively” and unemployment  set to rise, “a decline in property prices a near inevitability”. However the range of predictions vary dramatically.

“Digging through the Q1 2020 results of the large Banks, you can find forecasts and assumptions ranging from a 3.5 per cent fall during 2020 to a 19.7 per cent fall. 

“Two weeks ago, the Monetary Policy Committee suggested a ‘scenario’ (they refused to call it a forecast as there is so much uncertainty) of prices sliding by 16 per cent.”

However, McDowell says the property market is beginning to wake up and

Investors are ready to find opportunities.

He says: “The lights have been turned on, the band has struck up and a few intrepid performers are cautiously making their way to the floor. 

“So, what do we, as a specialist mortgage lender, want to do? 

“Well when the music is playing, you dance, or you leave. And we’re going to dance.

“Let’s be clear, I am worried about house prices and falls in values look increasingly likely. 

“But as a lender, when you’re worried about asset prices, you double down on the borrower and serviceability.”

HTB is therefore limiting its 75 per cent LTV tier to a maximum loan size of £750,000 within the M25 and £550,000 outside.

The borrower cannot have taken a payment holiday recently.

It is raising income cover ratios by 15 per cent, so for example limited company borrowers would need cover of 140 per cent instead of 125 per cent previously.

The borrower must have a track record in buy-to-let and the property must have been successfully rented recently.

New builds, heavily refurbished properties and studio flats are excluded and mortgages must be for purchase or minimal capital raising.

Less restrictive criteria is available on its lower LTV products.