The LTV ratio is intended to ensure that the underlying collateral – the property – is sufficient to cover the loan, were the borrower to default. For borrowers, negative equity occurs when the value of their outstanding mortgage falls below  6  BIS central bankers’ speeches  the value of the property.
Needless to say, this is less likely to happen the lower the initial LTV ratio. Figure 3 shows that the proportion of new loans with a LTV ratio above 80% increased every year preceding the crisis.