Chief Executives of three British lenders have written the chairman of the Treasury Select Committee to emphasize the need for the Bank of England to increase the loan of income (LTI) power limit.
The Chief Executives of Skipton Group, Yorkshire Building Society and Nationwide have jointly written to the BOO’s Financial Policy Committee chairman Dame Meg Hillier MP in the hope of increasing the LTI from the current rate of 15%, which limits how many more mortgage loans can be provided with more than 4.5x income.
The banks are of the opinion that increasing the limit lenders would enable more first buyers to support more first buyers, so that more people have a house.
In the meantime, Skipton Building Society (part of Skipton Group) has made changes to the credit criteria, in fact from Monday 9 June.
Main updates include:
- Reduced residential stress frequency for shorter -term products – Customers who take a mortgage with a product term period under five years receive a lower stress rate, which means that shorter conditions will no longer have a negative influence on borrowing borrowing.
- Lower income threshold for higher loan to income (LTI) – The minimum income needed to gain access to a 5.5x LTI is halved from £ 100,000 to £ 50,000, so that a larger loan potential is opened for a wider group of customers.
- Increased maximum LTI for higher LTV loans -For customers with a loan-to-value (LTV) between 90.01% and 95%, the maximum LTI is increased from 4.75 to 5, provided that the family income is greater than £ 50,000.
Skipton Chief Executive from Homes Charlotte Harrison says: “At Skipton we continue to recognize the growing affordability challenges that first confronts first buyers.
“The adjustment of stress figures alone is not always enough, because many potential buyers are still being hit by the limitations that the loan of income (LTI) CAP on our lending on our loans. That is why we follow a more extensive approach by both revising both, while staying within the current limit.
“And as a result of the changes that we have made, loan sizes can increase up to £ 45,000 (+16%) for a typical household that earns £ 60k.
“We continue to support calls for an evaluation of the LTI current limit. In the meantime, as part of our dedication to support more first buyers, we make changes to the stress frequency, which reduces the income requirement to reduce larger loans, while we increase our LTI policy by 95% LTV.”