Both 95% LTV lending and first-time buyer lending declined year-on-year in Q2 2015 for the second consecutive quarter.
Genworth’s analysis of Bank of England figures found that 95% LTV loans made up £3.43 of every £100 of mortgage lending since HTB2 was launched 18 months ago, compared to 1.77% in the 18 months prior to its launch.
Simon Crone, vice president for mortgage insurance – Europe at Genworth, said: “We are potentially facing a situation where the high LTV market could easily fall back into decline with the end of HTB2 now just over a year away.
“Even if the market remains at its present level or grows without government backing, it stands to do so without the added protection of the mortgage guarantee, which the FPC has judged as being effective in upholding underwriting standards. Neither a drop in lending nor an increase in risk looks like an attractive option for the post-HTB2 era.
“Given the FPC’s endorsement of HTB2, it would contradict the government's stated ambition of encouraging homeownership if it lets the scheme tail off without a suitable replacement, especially since private insurers are willing to work with the Treasury and regulators to remove the burden from taxpayers. Private mortgage insurance could maintain and increase current lending levels while also protecting the public purse by carrying this mortgage risk.”
