We talk mortgages
“We Talk Mortgages” Jon Cooper, head of mortgage distribution at Aldermore, discusses our recent 90% LTV trial and how we plan to re-enter this important sector. Brokers faced significant challenges in 2020 regarding securing high LTV (Loan-to-Value) customers.
Limited product offerings characterised the market as lenders sought to balance managing risk, handling volumes, and maintaining service levels amidst the ongoing pandemic. The availability of 90% LTV products drastically declined since March, leaving only a few options, often restricted to specific geographic areas.
Recognising the hurdles brokers encountered, Aldermore has actively taken steps to assist them in catering to high LTV clients. Our commitment involves re-entering the lending landscape for this crucial market segment, all while prioritising service excellence and carefully managing our risk exposure.
In a recent initiative, we conducted trials for two 90% LTV products last month, and the outcomes were highly successful.
The aim is to address the existing challenges and broaden the scope and accessibility of high LTV products for brokers. By re-entering this market, Aldermore seeks to empower brokers with a more diverse range of options, fostering a mutually beneficial environment for both brokers and high LTV clients.
We remain dedicated to navigating the complexities of the lending landscape, ensuring that our efforts contribute positively to the overall industry.
We talk mortgages | What we did
In early November, we introduced two temporary fixed-rate mortgages with a loan-to-value (LTV) ratio of 90%, exclusively available through brokers. These offerings encompassed both a two-year and a five-year fixed-rate option, catering to individuals with a maximum 5.5 times loan-to-income ratio.
Recognising the anticipated surge in demand, particularly from first-time homebuyers and borrowers aiming to finalise their property purchases before the conclusion of the temporary Stamp Duty holiday in March 2021, we strategically designed these products.
As pioneers among specialist lenders in the relaunch of 90% LTV mortgages, our primary objective was to assist brokers in securing funding for their clients. This initiative also served as a trial, providing valuable insights into the preferences and needs of customers seeking high LTV products, thereby aiding us in refining our strategic approach.
The reception of our temporary 90% LTV products exceeded expectations, gaining widespread popularity among brokers. The trial period allowed us to glean valuable lessons and insights. We have diligently analysed our experiences in reentering the 90% lending landscape, using this information to shape our future strategies in this sector.
Our commitment to understanding and meeting the evolving needs of our clientele remains unwavering. (We Talk Mortgages)
We talk mortgages | What we learned
(We Talk Mortgages) Unsurprisingly, we had a really positive response from brokers, and the products were in demand from a diverse range of clients:
- We saw particularly strong business volumes from the northern regions of England, Wales and Scotland, and relatively less from London and the South East.
- We also noted a high level of applications on new-build properties.
- The applications we received were of an extremely high quality, and conversions to offer were very high.
- All the cases we received were for purchases, although the deals were also available to those remortgaging.
- Three-quarters of applicants opted for our two-year fix, with a quarter favouring the medium-term security of the five-year rate.
- Almost eight in 10 applications (77%) came from first-time buyers, with 23% from home movers.
We talk mortgages | What’s next?
We recognise the growing demand among brokers for expanded options at higher Loan-to-Value (LTV) ratios, and we are dedicated to re-entering the 90% LTV market for the long term. The insights gained from our recent trial conducted last month have been instrumental in shaping our strategy for high LTV lending.
We maintain our 85% LTV product offering, up to 5.5 times income. We are actively reassessing our lending criteria in response to the evolving pandemic situation, considering business volumes, and evaluating our service levels.
Aldermore’s adaptable underwriting approach is centred on individual circumstances, enabling us to explore avenues for approval whenever possible. Recognising the imperative for increased 90% LTV options for your clients, we remain steadfast in our commitment to re-enter the market in the near future. 
We pledge to provide brokers with a diverse range of choices and to adapt to the dynamic landscape of lending, ensuring that we meet the evolving needs of both brokers and their clients.
We’ve come to the end of our publication on “We Talk Mortgages | How Aldermore Supporting Broker’s High LTV Clients | 2020” Credit: Jon Cooper, Aldermore. Until next time, stay Connect!