Lloyds puts further restrictions on interest-only
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Lloyds Banking Group will now only allow interest-only lending of up to 75% LTV for its Halifax brand.
The lender currently accepts a maximum LTV on interest-only loans of 85% LTV.
With effect from Wednesday 6 April, the maximum LTV for all new mortgages where all or some of the lending is on an interest-only basis will be 75%.
This will also be applicable to any existing customers that wish to port their mortgage.
Lloyds says this change will ensure that the interest-only lending policy is aligned across all mortgage brands within Lloyds Banking Group.
A spokeswoman for Lloyds says: “We had different policies across the group and Halifax was out of line. This change means Halifax is now inline with a consistent approach across all brands and channels.”
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Readers' comments (7)
Ancient Wisdom...is a mortgage broker in N3 | 30 Mar 2011 3:26 pm
...more and more lenders are following suit on restricting interest only above 75% LTV - this will impact lending volumes in the future.
However, research shows that around 50% of people who own homes, have over 50% equity in them.
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john | 30 Mar 2011 3:30 pm
fair enough for new business, but this means anyone looking to port willbe in trouble, even though they signed a contract to have a portable loan on int only
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Anonymous | 30 Mar 2011 3:35 pm
@John
If the policy is like the rest of the Lloyds Group, your clients will be able port on I/O if already on I/O, but anything on a top-up would then need to be taken on full repayment
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john | 30 Mar 2011 3:46 pm
anon, it is not like this at all, I had a client who had 90% ltv on int only, wanted to port but was onyl allowed to port 855, even though the product was a 90, because their criteria was 85, and now 75, they had to port 85 and pay a small erc
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Danielle | 30 Mar 2011 5:22 pm
To John:
If you've ever actually read a mortgage offer it states that the client can apply to port their mortgage subject to lending criteria at the time. So if lenders decide to change their I/O policy or any other lending policy for that matter then the ported application can only go ahead based on new policy.
Bit worrying you didnt know that and are giving 'professional' advice to your clients!
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John | 30 Mar 2011 5:44 pm
Lloyds say Halifax out of step with the group. Well Halifax has a better view than Lloyds. It's the old problem of bankers in charge of what was a building society industry (yes Halifax became a bank too before takeover).
But all undrewtiting is now under what bankers call a 'risk manager' which is the best oxymoron in the industry. They cannot assess risk.
So a top professional or investment banker with bonuses, say with a three year history at Goldman Sachs (golden bags) cannot have an 85% int. only mortgage? Deary me. Pack in Lloyds or dig out some good old building society underwriters. You haven't got a clue.
John
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Bob Windust | 31 Mar 2011 0:47 am
If the whole industry follows suit then base the principal of supply and demand property prices can only drop or in some areas plumet for the next couple of years "any wagers"?
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