Covered Bond Loan-to-value (LTV)

Covered Bond Loan-to-value (LTV)

The loan-to-value, or LTV, of a mortgage is one of the most intuitive measures of the riskiness of a loan. Here, Richard explains some of the variations of applying an LTV rule and some of the ways to calculate it.
Overview

The loan-to-value (LTV) is the ratio of the size of the loan to the value of the property securing it. It is a useful measurement of the riskiness of a loan. As such, it is the basis of covered bond ratings, investor analysis and covered bond ratings in every country.

Key learning objectives:

  • Define LTV and learn how to calculate it

  • Identify what LTV ratios tell you and identify its uses

  • Discuss the different ways to measure value

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Summary
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Expert
Richard Kemmish

Richard Kemmish

Richard is a consultant working mainly in the covered bond market. He helps Finance Ministries and Central Banks in countries without covered bond laws to put legal frameworks in place. He has also helped the European Commission with their legislative agenda for covered bonds and related products.

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