Halifax to restrict income multiple to x 4 on mortgages over £500,000

[Freelancer Financials]

It's mainly the banks who were bailed out by the government, Lloyds (HBOS) group and now NatWest (RBS). The government injected £37b into them during the credit crisis.

In return for the £37b (tax payers) investment, the government has a say in how the banks are run. They're hoping the other banks will follow, it will be interesting to see if they do!

Frankly, I don't think it will have any effect at all. The upper end of the London market is influenced by oversees cash buyers from Russia, South East Asia, China and The Middle East. Anyone living in London knows this. It's also straight forward Economics, demand and supply, there isn't enough housing stock in London.

[Martin@AS Financial]

Nat West have just followed suit as I have just received this:



From Friday 6 June, NatWest Intermediary Solutions will be introducing a four times loan-to-income cap and maximum term of 30 years for all mortgage loans of more than £500,000. This change of policy is being introduced primarily to address the inflationary pressures we are seeing in London and will be applied in addition to the standard affordability assessment.
NatWest Intermediary Solutions places a strong focus on affordability and already has measures in place to safeguard customers borrowing large amounts, for instance, reducing loan to values for larger loans.
This measure adds to those safeguards and is targeted particularly at customers interested in the upper end of the London market, where the bank has seen the most inflationary pressure.

[darmstadt]

I think your right in that it is not about taking control of prices. The Lloyds Group is pretty huge as it includes Halifax, Scottish Widdows, Intelligent Finance, Bank of Scotland and C&G. I believe they have changed their policy to make sure they are not overly exposed when rates start to increase. especially as they are still partially state owned.

I think there's an oxymoron in there somewhere

[d000hg]

How many mortgagues on on over £500k with income?

Can you clarify what you are asking?

[BrilloPad]

How many mortgagues on on over £500k with income?

No wonder businesses are stuffed. I tried to buy a house in LLandudno to run as a hotel. 4% mortgage up to 90% no issue. Then found it had to be a business loan. 10% mortgage to 60% only. And three times profit from running the hotel - private income would not be taken into account.

Asia is taking over...

[Freelancer Financials]

This was inevitable following Mark Carney's warning about the risks of a housing bubble.

In an interview with Sky News on 18th May, Carney said the number of lenders offering 4 x income or more to borrowers was creeping up, adding: "We don't want to build up another debt overhang that is going top hurt individuals and is going to very much slow the economy in the medium term.

Read on .... Mark Carney: Housing market has deep problems - Industry in depth - Mortgage Introducer UK

My take on this is that the Lloyds Group was pressured by the government, FSA & BoE to adopt this policy to take the heat off the booming house market in the South East and especially London. By getting the largest lender in the country to introduce this they're hoping the other lenders will follow, and I expect it is only a matter of time before they do. They're trying to restrict the borrowing on the larger loans over £500,000.

If this doesn't work the next change will be the Help to Buy policy.

[Martin@AS Financial]

Or... they are simply managing risk, rather than trying to control prices. Government policy via Help to Buy is intended to have the reverse effect, so I'm not convinced.

I think your right in that it is not about taking control of prices. The Lloyds Group is pretty huge as it includes Halifax, Scottish Widdows, Intelligent Finance, Bank of Scotland and C&G. I believe they have changed their policy to make sure they are not overly exposed when rates start to increase. especially as they are still partially state owned.

[speling bee]

It's a good question. The Lloyds Banking Group is still partially state owned to the tune of 25% which may have something to do with it.

Or... they are simply managing risk, rather than trying to control prices. Government policy via Help to Buy is intended to have the reverse effect, so I'm not convinced.

[Martin@AS Financial]

Why would individual banks work to cap inflationary pressures, and lose business to banks that decide to do otherwise?

This move must surely be to mitigate against the risk of loss to the bank from non-performing high value and income multiple mortgages.

It's a good question. The Lloyds Banking Group is still partially state owned to the tune of 25% which may have something to do with it.

[speling bee]

This is pretty big news in the world of mortgages. It is being done to try and cap inflationary pressures on the London housing market. Other contractor friendly lenders who work off your daily rate will still go to 4.5 x income but it will be interesting to see if they follow suit as they may not want the influx of business.




Lloyds slaps 4 x income restriction on borrowing over £500K | News | Mortgage Strategy

Why would individual banks work to cap inflationary pressures, and lose business to banks that decide to do otherwise?

This move must surely be to mitigate against the risk of loss to the bank from non-performing high value and income multiple mortgages.

[NorthWestPerm2Contr]

This is pretty big news in the world of mortgages. It is being done to try and cap inflationary pressures on the London housing market. Other contractor friendly lenders who work off your daily rate will still go to 4.5 x income but it will be interesting to see if they follow suit as they may not want the influx of business.




Lloyds slaps 4 x income restriction on borrowing over £500K | News | Mortgage Strategy

This is surely a good thing. Anything that can slow the acceleration of price rises will help reduce any impending bursting of the bubble. 10% increases are certainly unsustainable and we are heading for another crisis unless something is done immediately.

[Martin@AS Financial]

This is pretty big news in the world of mortgages. It is being done to try and cap inflationary pressures on the London housing market. Other contractor friendly lenders who work off your daily rate will still go to 4.5 x income but it will be interesting to see if they follow suit as they may not want the influx of business.




Lloyds slaps 4 x income restriction on borrowing over £500K | News | Mortgage Strategy