Lenders’ first-half results reveal modest LTVs prevail

Several of the major lenders have released their figures for the first half of the year, revealing a mixed picture. While HSBC, and Coventry and Yorkshire building societies, performed strongly, Santander and Barclays struggled.

Mostly, it’s a tale of reduced profits or indeed considerable losses, and further job cuts. Even HSBC is making tens of thousands of staff redundant, despite its gross new mortgage lending growing to 35 per cent in the first six months of 2011, to £6.5bn. Meanwhile, Northern Rock’s numbers fell 25 per cent year-on-year. With £1.5bn of gross mortgage lending in the first half of the year, the lender said it was managing its lending for value over volume.

The average loan-to-value (LTV) makes for interesting reading. Northern Rock’s average LTV on new lending was 69 per cent, compared to 60 per cent in the first half of last year, showing its growing commitment to higher LTVs.

Barclays’ average LTV on new lending increased from 51 per cent to a slightly improved 53 per cent. HSBC’s average LTV is 53 per cent, so while first-time buyers account for 28 per cent of its’ borrowing in the past six months, many of them must have had significant financial assistance from their parents. Lloyds was more generous on LTV, with an average of 61.3 per cent, up from 60.9 per cent in 2010.

As banks continue to make efficiencies, the outlook is bright for borrowers, as lenders compete with ever-lower mortgage rates. However, it remains the case that the more cash you can put into a purchase, or the more you can pay down your mortgage, the better off you will be in terms of a more favourable rate of interest and less stringent credit scoring.

Speak to Private Finance for advice whether you are buying a new property or remortgaging.