=although not exclusively a residential mortgage loan concept, in the context of securitisation, loan-to-value or LTV is considered a key component of the credit analysis of an RMBS transaction. LTV is the amount the residential mortgage loan to the market value of the residential property purchased or refinanced by that loan. For example, if a borrower borrows €400,000 to purchase a €600,000 property, the LTV is 66%. It is usually accepted that the lower the LTV of a loan, the lower the credit risk since, even in a crisis environment, the sale of the property providing security to the mortgage loan is more likely to yield sufficient cash to repay the loan. One figure often provided in the description of an RMBS securitisation is the average LTV which is, as the name suggests, the average of the LTVs of all mortgages in the securitised pool.
