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Brokers shrug off Lloyds’ interest-only restriction

Lloyds Banking Group’s decision to restrict interest-only lending to 75% LTV for its Halifax brand was ex-pected, say brokers.

From April 6 new borrowers and existing Halifax customers looking to port their mortgage will be offered a maximum LTV of 75% for interest-only products, down from its current 85%.

Andy Pratt, chief operating offi-cer of Alexander Hall, says the move is not surprising considering Lloyds group’s decision last May to cap the amount that can be borro-wed on an interest-only basis at £500,000.

He says: “When Lloyds group made that change it came as a shock so, but the latest move makes sense.

“However, while the like-lihood of obtaining a high LTV loan over £500,000 is low, it seems illogical to cap interest-only at that amount because borrowers purchas-ing high-value properties are more likely to have varied income and be suitable for an interest-only deal.”

David Sheppard, managing direc-tor of Perception Finance, says: “I’m not surprised by the change because Lloyds group has always been a cautious lender.

“It was only a matter of time before it made this move, because that’s the way the rest of the market is going. Halifax is simply joining other high street lenders.”

Lloyds group says the move was driven by a desire to iron out inconsistencies in policy across its brands.

A spokeswoman for Lloyds group says: “We had different policies across the group. This change means Halifax is now in line with all brands and channels.”

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