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Will mortgage lenders increase LTV in light of the stamp duty announcement?(5 Posts)
What do you think? Will lenders increase LTV due to the stamp duty announcement? Will it push prices up?
They’re pretty separate in my minds - LTV is mostly based on affordability of payments and the banks appetite for risk. Stamp duty could push pricing up in that more people decide to move and demand gets higher I guess. Some people will be happy to invest their stamp duty saving in their house and pay more to secure.
The two aren't really connected. LTV is based on risk and means to acquire or liquidate funds should the mortgage holder default payments.
Stamp duty is simply tax to the government and has nothing to do with the lender.
As a buyer you should have more money to spend on your new home by way of an increased deposit (as stamp duty is a cash payment) but not more income to secure a bigger mortgage. Your LTV would be less so you would benefit from a better interest rate.
Or as the government suggest, more cash to spend doing up a property and increasing trade business.
By increasing the LTV would suggest you are less of a risk as a borrower, but that's not the case in a recession. Lending Rules usually get tighter.
It will bring some prices down - some property's in the £500-£600 k mark might come below the £500k to attract more buyers.
House prices below £500k should get more potential buyers.
I don't think it will push the lower priced houses up, but it will be more competitive and a faster market.
Which is what they want - to increase turnover.
No. The LTV is about the risk the mortgage company has if someone defaults on their payment to get their funds back. The higher the LTV ration the less likely they will be to get their money back.
If anything it may make it even harder to get a high LTV as people may pay over the odds to get a house in the short time period meaning a likely crash of the price will happen post march pushing up the mortgage providers risk.
What it does do is allow you to put an extra up to £15k into buying which will drive down how much mortgage you would need. or allow you to buy something not in such amazing condition and have funds to do a bit of work (although admitedly not a huge amount)