Barclays has limited all mortgage applications to a maximum of 4.5 times income.
Previously, the maximum LTI available to a borrower was determined by their salary, although this has now been scrapped and a 4.5 times income cap placed on all loans, down from a maximum of 5.5 times income before.
Any cases submitted before 21 January will be processed under the previous criteria, though applications handed in after this date will have to be resubmitted.
In a statement to brokers, Barclays says: “Any cases submitted which are greater than 4.5 times income will be declined at underwriting.”
Perception Finance managing director David Sheppard says: “It’s one thing to have a cap on income multiples for higher LTVs but capping across all loan to values is a bad move that will lead to concerns other lenders will follow suit.
“A cap of 4.5 times income is often not enough for people looking to buy in London. I am surprised by this.”
Coreco director Andrew Montlake says: ”While I don’t have a problem with doing things meant in the customer’s best interests, I think the sudden nature of the announcement took people by surprise. And some people will not get the amount they expected.
”I hope this is just a one-off and I suspect many lenders will use this to claw back some business.”