Accord Mortgages introduces LTI cap on loans over £500k

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

The lender says it has introduced the cap to ensure it lends responsibly to its borrowers.

In a note to brokers, Accord says: “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 becomes 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 was at least 3 percentage points higher at any time over the first five years of the loan.

Prior to the Bank revealing its new LTI rules, Lloyds Banking Group and Royal Bank of Scotland moved to cap loans over £500,000 at 4 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, whereas the maximum LTI below 85 per cent LTV is 5 times income.

Last week, the Building Societies Association urged policymakers not to make the proposed LTI cap permanent and called for it to be reviewed, with a view to being removed, after 18 months.

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