Accord Mortgages introduces LTI cap on loans over £500k

Accord Mortgages has introduced a four-times income cap on loans above £500,000.

In a note sent to brokers last week, the lender said it has introduced the cap to ensure it lends responsibly to its borrowers. Accord said: “This change to our residential lending policy is in line with other competitors and current market conditions and reflects our commitment to sustainable and responsible lending.”

Accord is the latest to introduce an income multiple cap following the Bank of England’s announcement in June that, from 1 October, lenders must limit the proportion of new lending above 4.5 times income to 15 per cent. At the same time, the Bank announced lenders must stress-test borrowers’ affordability as if base rate were at least three percentage points higher at any time over the first five years of the loan.

Before the Bank’s announcement of the new LTI rules, Lloyds Banking Group and Royal Bank of Scotland moved to cap loans over £500,000 at four times income. RBS also announced an LTI limit of 4.99 times income for all buy-to-let applicants.

Separately, Nationwide has applied a limit of 4.75 times income across all residential applications.  

Aldermore Bank has also imposed a maximum LTI ratio of 4.5 times income for loans above 85 per cent LTV, including products through the Help to Buy mortgage guarantee scheme, while the maximum LTI below 85 per cent LTV is five times income.