Lloyds Banking Group and Royal Bank of Scotland have stated they have no plans to follow Barclays in applying blanket LTI caps.
Today, Mortgage Strategy revealed Barclays had limited all mortgage applications to 4.5 times income, regardless of the borrower’s salary or the LTV. Previously, the maximum LTI available to a borrower was determined by their salary. The previous maximum was 5.5 times income.
In May Lloyds Banking Group started capping income multiples to four times income for borrowing above £500,000 and says it has no plans to amend this policy.
NatWest Intermediary Solutions followed suit a month later and applied a four times income on applications above £500,000, with no LTI cap for loans below that size. It has also confirmed it will not make any further changes to its policy.
Nationwide and Santander say they have no plans to lower their LTI caps to the same level as Barclays.
Nationwide currently has a blanket cap of 4.75 times income on residential lending but has no plans to amend this
Santander is understood to have a limit of five times income on residential applications, depending on affordability calculation results. While it has not confirmed the exact LTI cap, Santander has stated it has no current plans to change its income multiple policy.
Chadney Bulgin mortgage partner Jonathan Clark says: “I was really taken by surprise when I read about the Barclays change, especially as they just announced a criteria change a week ago before shifting again.
“I would be very worried if other lenders started to follow suit because I think that would lead to a market of vanilla products and very little room to innovate. We don’t want a trend of blanket caps across all lending, hopefully Barclays is on its in doing this.”