Lombard lending has become one of the most important tools for high-net-worth borrowers in 2025. Rather than selling investments to fund a property purchase, tax bill or business opportunity, wealthy clients are increasingly raising finance against their securities portfolios. The critical question they ask is always the same: “How much can I actually borrow against my assets?”

The answer sits in the loan-to-value ratio – or LTV – that a private bank is prepared to offer. On paper, you might hear headline figures that sound generous. In practice, every portfolio is sliced, analysed and stress-tested, and the real borrowing limit can be very different from what clients expect. Cash and sovereign bonds might unlock high advance rates; a concentrated equity position or an illiquid fund can be heavily discounted or even excluded altogether.

At Willow Private Finance, we regularly see the gap between marketing language and what credit committees really approve. Our role is to help clients understand how banks think about collateral, how LTVs are constructed line by line, and how to structure portfolios so that Lombard facilities remain safe and flexible. This article sets out how LTVs work in 2025, how they differ by asset class, what actually triggers a margin call, and how sophisticated borrowers can use LTVs strategically rather than dangerously.

For broader context on using portfolios to support lending, you may also want to read High Net Worth Mortgages in 2025: What Lenders Look For Beyond Income and Securities-Backed Lending vs Mortgages: 2025 Comparison on the Willow Private Finance blog. Together, these articles show how lenders are moving away from simple income multiples and towards a far more nuanced, wealth-based view of risk.

Market Context

The backdrop to Lombard lending is a combination of elevated interest rates, a cautious mortgage market and investment portfolios that many clients are reluctant to disturb. While the worst of the post-inflation rate hikes may be behind us, borrowing costs are still significantly higher than the ultra-low environment HNW borrowers became used to in the 2010s. Traditional mortgage underwriting remains strict, and in many cases lenders are unwilling to ignore weaker income profiles just because a client is clearly wealthy on paper.

At the same time, many investors have rebalanced portfolios and positioned them for long-term recovery and growth. They are understandably reluctant to liquidate well-constructed positions simply to fund a deposit or a tax bill, particularly where that would trigger capital gains tax or interrupt compounding. The result is a natural demand for asset-backed liquidity rather than outright asset sales.

Private banks like Lombard lending because it is fully secured and the collateral can, in theory, be liquidated quickly. But the volatility seen across equity and bond markets over the past few years has reinforced the need for prudence. Banks cannot simply lend the same percentage against every portfolio and hope for the best. Instead, they have refined their risk models, introduced more granular asset-class LTVs, and placed greater emphasis on diversification and stress-testing.

The modern Lombard facility is therefore a balance: attractive and flexible for the right client, but tightly calibrated so that the lender can withstand sharp market moves without being forced into distressed asset sales. Understanding where you sit on that spectrum is the key to using these facilities confidently.

How Lombard Lending LTVs Work

At a simple level, an LTV is the proportion of your collateral’s value that a bank is willing to advance. If a lender offers 60% against an eligible portfolio worth £10 million, your maximum facility would be £6 million. In reality, the process is more layered. Private banks do not look at your portfolio as a single line; they disassemble it and assign different “advance rates” to each component based on perceived risk.

They will start with a detailed statement of holdings and identify the asset types involved: cash, government bonds, investment-grade credit, equities, ETFs, funds and any more esoteric positions. Each category will have an internal grid of indicative LTVs. The bank then adjusts those indicative numbers up or down based on liquidity, volatility, diversification and concentration. The result is a weighted average LTV across the total pool.

For example, a portfolio that is 40% in short-dated government bonds, 40% in diversified global equities and 20% in a single technology stock will not be granted one homogenous LTV. The bonds might be given a relatively high advance rate; the diversified equity sleeve a more moderate one; and the concentrated technology position a lower figure, or even be capped at a specific nominal amount. The composite outcome is the genuine borrowing base.

It is also worth noting that banks think in terms of buffers rather than simply what is possible on day one. Their objective is not just to be comfortable today, but to remain comfortable if markets move sharply over the next weeks or months. This is why the numbers often feel conservative to clients. The bank is building room for volatility into the initial LTV so that both sides avoid constant margin calls every time markets wobble.

LTV by Asset Class

Although each lender has its own matrix, some broad patterns have emerged.

Cash and near-cash assets, such as short-term deposits or money market funds, typically attract the highest advance rates. From a credit perspective, they are as close to risk-free as collateral gets. Where a facility is intended to be short term, some banks will take a very comfortable view of high-quality cash balances, especially if those balances are already held on their own platform.

High-quality fixed income is usually the next most favoured category. Sovereign bonds issued by stable governments and investment-grade corporate bonds offer predictable income and relatively modest price swings, so they underpin generous LTVs. Longer-duration or lower-rated bonds tend to be treated more cautiously because of their sensitivity to interest rate moves and credit risk.

Equities and equity ETFs generally sit in the middle of the spectrum. A diversified basket of blue-chip stocks or broad index trackers will usually support decent LTVs, but the bank is acutely aware that equity markets can move sharply in a short period. Volatile sectors, leveraged companies or highly speculative names are discounted accordingly. The same is true for thematic or single-sector ETFs, which may not provide the diversification that the label “fund” might suggest.

More complex or less liquid assets often fall towards the bottom of the LTV hierarchy. Hedge funds, private equity, unlisted positions and highly structured products can be difficult to price or exit quickly. Some institutions decline to lend against them altogether; others apply significant haircuts and cap their contribution to the overall collateral pool. Even where they are accepted, they rarely form the backbone of a Lombard facility.

The important takeaway for borrowers is that headline LTVs advertised by banks are only meaningful when you understand how your particular mix of assets will be treated. Two £10 million portfolios can deliver very different borrowing capacity depending on composition.

How Lenders Haircut Riskier Assets

When clients talk about “haircuts”, they are really describing the way a bank reduces the notional value of certain holdings for collateral purposes. A share that is worth £1 million in the market might, from a lending standpoint, be treated as if it were worth £700,000 or even £500,000, depending on perceived volatility and liquidity.

The first dimension is price risk. If an asset has a history of large daily or weekly percentage moves, the bank knows that its lending exposure could become uncomfortably high very quickly if markets fall. To guard against this, they reduce the effective value used in their LTV calculation. The second dimension is liquidity: an asset that trades thinly, or where the bank does not have full transparency on underlying holdings (common in certain funds), is at greater risk of gapping down or proving hard to sell at a fair price in stressed conditions.

Credit committees therefore apply haircuts to build a safety margin. From the borrower’s perspective it can feel punitive, especially if you are close to the company or believe you understand the risk better than the model does. But from the lender’s point of view, consistency and prudence are essential. They must assume that if one client is stressed, others may be too, and that they might have to manage many positions simultaneously.

Haircuts are also influenced by correlation. A portfolio that appears diversified at first glance may in fact be heavily exposed to one geographic region or sector. In such cases, if a macro event hits that area, many holdings could fall together. Where correlation risk is high, lenders will often assume a more aggressive stress scenario and adjust haircuts accordingly.

This is one of the reasons why professionally managed, discretionary portfolios can obtain better LTV treatment. The bank can see, and often directly oversees, the risk management process behind them. That transparency and diversification comfort translates into more efficient use of the assets as collateral.

Dynamic LTV Changes and Monitoring

A notable development in 2025 is the use of more dynamic monitoring tools. Many private banks now track client collateral in real time and feed live market data into their risk engines. In practical terms, this means that they can spot deteriorating positions early and, where appropriate, adjust available headroom or issue early warning communications.

For borrowers, this has both advantages and implications. On the positive side, the bank may be more comfortable granting a generous facility up front if it knows it can watch the risk closely and react quickly. It might also be more willing to increase LTVs modestly when markets are calm. On the other hand, clients must accept that their usable capacity is not necessarily fixed for the life of the facility; it can tighten if volatility rises or if specific holdings underperform.

It is therefore wise to treat your approved LTV as the upper limit, not the level you should operate at. Running very close to the line in a dynamic environment can turn a temporary market dip into an avoidable margin call. Many of the most sophisticated clients we work with deliberately stay below the maximum and think of the unused portion as a volatility buffer rather than wasted capacity.

What Really Triggers a Margin Call

A margin call occurs when the value of your collateral falls to a point where the outstanding loan breaches the agreed threshold. It is not, in itself, a sign of failure; rather, it is the mechanism by which the bank restores the agreed risk profile. In practice, the experience is rarely pleasant, especially if markets have moved sharply and emotions are already running high.

The trigger can be a broad market sell-off, a sector-specific shock, a currency move or a sharp fall in a single concentrated position. Often, it is a combination. Once the collateral value has dropped far enough, the lender will contact you and set out the required remedial action. You might be asked to inject additional assets, reduce the loan balance, or permit the bank to sell part of the collateral.

The timetable for responding to a margin call is set out in the facility documentation. In calm conditions, banks may be pragmatic and give clients a window to move funds from elsewhere or restructure holdings. In distressed markets, that flexibility may be more limited. If you are unable or unwilling to act, the bank has the contractual right to liquidate enough of the portfolio to bring the LTV back within limits.

From a planning perspective, the best way to manage margin-call risk is to design your facility so that it remains robust under plausible stress scenarios. That means borrowing less than the maximum, maintaining some unencumbered liquidity elsewhere, and avoiding over-concentration in highly volatile assets. A well-structured Lombard facility should feel like a source of comfort and flexibility, not a sword hanging over your investment strategy.

Strategic Use of LTVs for HNW Borrowers

When understood properly, LTVs are not simply a credit limit; they are a strategic planning tool. An HNW borrower might deliberately structure their portfolio in a way that optimises LTVs for a specific purpose, such as funding a UK property deposit, underwriting a 100% financing structure, or creating a standing liquidity line for tax and business opportunities.

For example, a client with a significant allocation to private equity funds might decide to rebalance, moving part of their wealth into a diversified, liquid equity and bond portfolio that can be used more efficiently as Lombard collateral. The underlying economic exposure to growth and income can be preserved, but the form is better aligned with lenders’ LTV frameworks.

Another client might prefer to keep their more speculative holdings outside the pledged portfolio. By ring-fencing the collateral base in a carefully curated account, they can enhance the average LTV and reduce haircut drag, while continuing to pursue higher-risk ideas elsewhere with their own capital.

In property transactions, LTVs become a design parameter for the wider financing structure. A borrower might plan a Lombard facility at a conservative LTV to fund the deposit, then pair it with a high-value mortgage on the property itself. That approach avoids forced investment sales, provides a clear path to eventual deleveraging, and can be tuned to their tax and residency profile. Related articles on our site, such as Using Lombard Loans to Buy UK Property in 2025, explore that combination in more detail.

The common thread is intentionality. Rather than asking “What is the maximum I can borrow?”, sophisticated clients ask “What LTV keeps my overall risk within a level I am comfortable with, and still delivers the liquidity outcomes I want?”

Outlook for Lombard LTVs

Looking ahead, we expect Lombard lending LTVs to remain central to the private banking offer, but always shaped by macro conditions. If markets stabilise and volatility measures continue to fall, some lenders may gently relax advance rates on diversified portfolios. If new shocks emerge, we may see the opposite: tighter LTVs, more conservative haircuts and sharper scrutiny of concentrated risks.

Regulators are also paying greater attention to leverage across the financial system, and while Lombard lending is generally seen as prudently collateralised, banks are keen to demonstrate robust risk management. That is likely to reinforce the trend towards more granular, data-driven LTV frameworks rather than broad-brush rules.

For HNW borrowers, the message is encouraging but nuanced. Lombard facilities will remain an efficient way to unlock liquidity without dismantling long-term investment plans. But the quality of your portfolio, the way it is structured and the way you use LTV headroom will increasingly determine how much value you can safely extract.

How Willow Private Finance Can Help

Willow Private Finance sits between clients and private banks, translating balance sheets into lending solutions. When it comes to Lombard LTVs, our work begins long before a credit committee sees your case. We review your portfolios, identify how different asset classes are likely to be treated, and model realistic borrowing capacity across a range of lenders rather than relying on generic headline figures.

Where appropriate, we liaise with your wealth managers to explore whether modest restructuring could materially improve the efficiency of your collateral – for example, by reducing concentrations or increasing the proportion of assets that attract higher LTVs. We also consider the bigger picture: how the Lombard facility interacts with property finance, future liquidity events, foreign exchange exposures and your long-term wealth objectives.

For clients using Lombard loans to support UK property transactions, we can align the facility with a mortgage strategy so that both sides of the balance sheet work together. That might involve using a Lombard line for deposits, bridging liquidity until a remortgage can be completed, or designing a combined structure for international buyers whose wealth and income sit in multiple jurisdictions.

Our role is not simply to secure the highest possible LTV; it is to help you secure the right LTV, on sensible terms, with lenders who understand your profile and are capable of supporting you through changing market conditions.