Buy-to-let
Borrowers wanting to buy a property valued at over £500,000 will only be able to borrow four times their income if taking out a mortgage with Lloyds Banking Group.
This is a targeted policy change primarily designed to address specific inflationary pressures in the London housing market. It applies in addition to the group’s usual affordability assessment and the move will impact around 8 per cent of its lending in London.
The new policy applies to mortgage lending through Halifax, Lloyds Bank, Bank of Scotland and Scottish Widows Bank.
Stephen Noakes, group director of mortgages, said: “Whilst the housing market outside of London is starting to improve, the recovery is fragile and prices largely remain below their peak. It is important we don’t disrupt this recovery.
“But in London, house prices are almost now 30 per cent above the 2007 peak. This is largely driven by issues of supply which are particularly acute in London and this is having an impact on income multiples which are failing to keep pace with asset growth.
“We’re not seeing such issues across the rest of the UK and therefore this is a targeted response to an issue largely in the upper tiers of the London housing market. This prudent update to our lending policies is intended to manage risks to our business and for our customers.
“The group continues to support the Help to Buy mortgage guarantee scheme as it has raised confidence in the housing market particularly outside of London. Help to Buy is not one of the factors driving London house prices. Just 2% of purchases in London in 2014 have been through the scheme with the significant majority of applications coming from the rest of the UK.”
