Ray Boulger is one of the most respected commentators on the mortgage market in the UK. IFA Magazine had the chance to discuss Boris Johnson’s announcement of the return of 95% LTV Mortgages.
The announcement made during Boris Johnson’s conference speech Tuesday left many property pundits confused as to have the new scheme may be achieved.
I asked Boulger where he expects the surplus capacity to meet demand might come from,
Boulegr said the question, ‘would be very relevant if there was any possibility of the Government scheme being available in the next 6 months, but there isn’t.’ Boulger explained, ‘The reality is that the Government is still in the very early stages of developing policy and reviewing the practicalities of it. The policy is to link 95% LTV mortgages to a long term fixed rate, which means the funding mechanism has to be agreed and any agreed scheme is likely to be at least a year away.’
Boulger was quick to highlight that the private sector has been working on different schemes to tackle exponential increases in lenders’ capital requirements for LTVs above 85% and 90%.
‘I expect the launch of a 95% LTV mortgage based on one of these schemes early next year from a major lender ready to devote adequate resources to processing a significant volume of applications, having recognised the commercial potential as a result of the current market failure to meet demand for high LTV mortgages.’
Boulger quoted the PM’s speech wherein he said, “we must be clear that there comes a moment when the state must stand back and let the private sector get on with it.” Boulger continued, ‘I suspect Boris will be as delighted as lenders and brokers to see a private sector solution to the 95% LTV problem, allowing him to suspend development of a state backed scheme.’