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Major lenders rule out blanket LTI caps following Barclays move

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.”



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  • Paul Adams 23rd January 2015 at 5:37 pm

    Just when you thought Woolwich could not get any worse!! I have been a broker for 15 years and every time I have attempted to use this lender, it has been a living nightmare and a waste of time. They make Accord look competent. At least they were potentially good for buy to lets which ended abruptly when they increased their BTL rental calc stress test massively. As always I will avoid them like the Ebola virus both now and for the rest of time itself……..

  • Chris Hulme 23rd January 2015 at 5:23 pm

    Common sense from all but Barclays then? Surely the whole point of MMR was to look at things on an individual basis rather than a blanket “you can all have the same” approach?
    Only late last year at the IMLA debate Linda Blackwell (present from the FCA) called for caution on the use of LTI’s and seemed to suggest LTI and Affordability are two separate animals.
    It’s pleasing to see most lenders taking the individualistic approach and they may well benefit where Woolwich and Barclays lose out.

  • Good Mortgage Man 23rd January 2015 at 5:20 pm

    Slightly hypocritical of LBG and NatWest when they already have an income cap of 4.5 x for loans above £500K!? Nationwide do not have a cap of 4.5 x, I regularly get 5.25 x with them. They have recently loosened their “allowable income” policy and will now accept 100% of bonuses. This will not necessarily disclose on the affordability calculator, but will feature once you DIP the case. You may well end up getting a higher figure than you expected.
    However, my worry now is that other lenders will see more higher LTI cases as a result of Barclays decision and will have no other option but to reduce their LTI ratios, or they will become the high LTI lender by default…