Miles Robinson, head of mortgages, Trussle

Pre-pandemic, there were 2,270 high-LTV mortgages available from lenders, compared with just 308 in January this year.

Alongside this, the criteria that applicants needed to satisfy were greatly tightened as lenders sought to decrease their risk.

High-LTV mortgages are deemed more risky, so it is understandable that lenders would seek to reduce their exposure during times of economic uncertainty.

However, due to government-backed incentives we have seen the housing market go from strength to strength over the past year. And, while some of this demand will no doubt fade as these incentives end, overall appetite from homebuyers remains strong.

Valuers are able to inspect properties again, so lenders don’t have to rely purely on automated valuations

With a stable housing market and consistent property-price growth, lenders face a much less risky climate than many had anticipated.

As a result, we have seen that lenders are already willing to offer larger mortgages to a wider group of people than they were this time last year.

Alongside this, more and more lenders are returning to the high-LTV market. While numbers have yet to reach pre-pandemic levels, 49 lenders currently offer 95% LTV mortgages and the number has been rising rapidly since March this year.

We have already seen signs of a gradual trend towards relaxing criteria since all high-LTV mortgages were taken off the market at the start of the pandemic.

As more lenders move into the high-LTV space, it gives them the opportunity to relax certain elements of their risk in a way that ensures they won’t be overwhelmed with applications.

Lenders are already willing to offer larger mortgages to a wider group of people than they were a year ago

In addition, with the country now adjusted to the ‘new normal’, valuers are able to inspect properties with new rules and regulations in place and therefore lenders don’t have to rely purely on automated valuations. This again allows them to start to loosen criteria because they are taking less risk in other areas.

As such, all the signs indicate that we will continue to see a relaxation of lending criteria in the coming months.

Nay

Martin Stewart, founder, London Money

To answer this question it may be easier to break it into components and tackle them individually.

‘Criteria’ — It can certainly be difficult sometimes to understand where lenders are heading in relation to their tweaks and the curtailing of various aspects of their criteria. In the current climate, every day is a school day and we are likely to forget more than we recall. Often it is a battle to try and remember even the basics. But, contrary to popular belief, lenders are not stupid. They have live data on any stresses emerging within their book and they will not hesitate to put a fire break in place to prevent a situation from worsening. Wouldn’t you do the same with your business ?

Let’s leave the banks to make their business decisions when they are ready

‘High-LTV mortgages’ — You could argue anything over 75% is high LTV and, if I were lending my own money to someone I’d never met for a property whose value I was relying on a computer to tell me, I’d be taking that position as well. The pandemic has continued to inflate the bubble of 10 years of very loose monetary policy. Banks will not want to be the canary down the coalmine on house prices, but they may decide how far down the tunnel the canary goes.

‘Improve’ — Yes, probably — possibly. But let’s not get hung up on overly criticising the lenders here. We are emerging from a pandemic that resulted in double-digit house-price growth and where some people’s income increased significantly. If, like Oliver, you want more, why not have a whip-round and start your own bank?

Lenders will not hesitate to put a fire break in place to prevent a situation from worsening. Wouldn’t you do the same?

‘In the near future’ — Yes, of course, over time the criteria could improve, but it’s a fool’s errand to put a timeframe on this. With the economy being so uncertain, flu/Covid season about to start, civil unrest apparently around every corner and a society that shows more empathy to an alpaca than it does to refugees, I wouldn’t want to put any money on saying when it will happen.

There are lots of challenges and bills that lie ahead for us all. I think, as an industry, we are best to focus on managing our own and our clients’ expectations, and to leave the banks to make their business decisions as and when they are ready.