No cap on mortgage LTVs from Osborne

No cap on mortgage LTVs from Osborne

18 June 2010 / by Rachael Stiles

Despite rumours that the Government was going to impose caps on the loan to value of mortgages, George Osborne made no mention of it during his speech at The Mansion House last night.

The Chancellor did not announce plans for an LTV cap on mortgages, which Moneyfacts had fretted would damage the first time buyer sector and "only serve to hinder the recovery" of the mortgage market.

Ray Boulger, of leading independent mortgage adviser John Charcol, commented: "In the Mansion House speeches at The Lord Mayor's Banquet this evening neither George Osborne nor Mervyn King made any reference, contrary to rumours, to the Bank of England using its new micro prudential regulatory powers to impose a maximum LTV cap on mortgages."

Darren Cook, spokesperson for said yesterday, before the speeches, that first time buyer mortgage customers – the "lifeblood of the property market" – would have been hit the hardest by restrictions on higher loan to value mortgages, at a time when they are already struggling to scrape together a deposit, so the absence of a mention last night will have come as a relief to those trying to get a foot on the property ladder.

"Mervyn King's comments on interest rates reinforced the view that Bank Rate will remain low for much longer than most economists are forecasting," Mr Boulger said.

This suggests that tracker mortgages "will continue to offer good value for quite a while longer," he added, "and that there is scope for fixed rate mortgages to fall further as the market reassesses its interest rate expectations."

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