MBT Affordability Insights: 95% is opening up, but with restrictions

However, the 95% market has shown signs of activity well before this launch. Accord, Skipton, Coventry, TSB, West Brom, Leeds and Halifax all decided to go it alone and launch deals at this LTV bracket ahead of the government scheme.

In fact, data from MBT Affordability shows that while 57% of cases where clients wanted to borrow 95% LTV in January were considered to be unaffordable, at the time of the government scheme launching in April, this had fallen to just 14%.

This is naturally resulting in more customers getting the loan they want and 44% of cases were considered affordable in mid-April, compared to 38% in March. Expect May to be even higher due to more lenders entering the market throughout April.

There is no underlying difference between those lenders making use of the government backing and those that are 'self-insuring'. However, of course, each lender has its own affordability calculations and criteria rules, and these can really vary. For example, some LTIs are restricted to 4.5 or 4.49, some lenders are restricting the types of income accepted and the maximum loan varies between £250k and £570k. In addition, some lenders stipulate first-time buyers only, most say no new build and others will not lend up to 95% LTV on flats – so there is a huge amount of variation even within this seemingly small segment.

Most lenders are offering both a two-year and a five-year fixed rate, and expect the rates to be higher than 90% LTV products of course, even with the reduced risk of the government guarantee. Also, credit scoring is likely to be tougher, with some lenders declaring as such, regardless of whether it is being government backed or not.

Overall, it’s great to see the 95% LTV space opening up for borrowers, with many lenders choosing to enter the market even without the government scheme. Access to these products is naturally more restrictive in terms of both affordability and criteria and it’s likely that lenders will flex and change their approach as they find their feet again in this market. It will be nearly impossible to keep up to date with these changes without technology, so make use of the tools available to you to ensure you are giving your clients the best possible chances of accessing a 95% LTV mortgage.