IMF proposes LTV cap

IMF proposes LTV cap

IMF proposes LTV cap

The International Monetary Fund (IMF) has suggested putting in place maximum Loan To Value (LTV) limits for lenders. This was suggested in a report detailing measures that would help prevent a housing bubble.

Quotes from the report titled "Policies for Macrofinancial Stability: Options to Deal with Real Estate Booms":

"macroprudential tools (such as maximum loan-to-value ratios linked to the real estate cycle) appear to have the best chance to curb a boom. Their narrower focus reduces their costs."

"even when they fail to stop a boom, they may still help to cope with the bust."

We have already seen the age of first time buyers increase to 38 and the biggest hurdle to home ownership is saving a big enough deposit. Introducing LTV caps could insure those that are struggling will continue to struggle, and would severely limit any proposals by the banks to help.

Getting a contractor mortgage with a suitable LTV can be a hurdle for many. At Contractor Mortgages Made Easy we do everything we can to alleviate the stress' and strains of getting a mortgage when you are contractor.

The Halifax Price index has shown a month on month increase in house prices of 0.1% in March. This modest growth is compared against a quarterly change of -0.6% and annual change of -2.9%.

Housing economist, Martin Ellis, commented:

"House prices continue to fall at a modest pace as measured by the quarterly rate of change, the best measure of the underlying trend in price movements. Prices in the first quarter of 2011 were 0.6% lower than in the fourth quarter of 2010. There was a 0.1% rise in prices in March and prices were a similar amount above those at the end of 2010."

"Our forecast remains for a 2% decrease in house prices in 2011 as a whole. Uncertainty over the general economic outlook and individual financial circumstances are likely to constrain housing demand, resulting in some modest downward pressure on prices."

Variations in house prices can impact you differently depending on your financial situation, this would usually mean home owners benefitting from an increase. However, the change in house prices this month has been very small, I doubt it has caused a significant change in outlook for home owners and non-homeowners alike.

The recent contractor mortgage product growth that we have seen has yet to have a significant effect on house prices.

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