Lloyds Banking Group has announced an update to its policy for new high value mortgage lending
From today, where the mortgage lending on a property in the UK is over £500,000, the group will assess the mortgage application by applying an income multiple limit of four. This is a targeted policy change primarily designed to address specific inflationary pressures in the London housing market. The new policy will be applied in addition to our usual affordability assessment.
Stephen Noakes, group director of mortgages said: “Whilst the housing market outside of London is starting to improve, the recovery is fragile and prices largely remain below their peak. It is important we don’t disrupt this recovery.
“But in London, house prices are almost now 30% above the 2007 peak. This is largely driven by issues of supply which are particularly acute in London and this is having an impact on income multiples which are failing to keep pace with asset growth.”
“We’re not seeing such issues across the rest of the UK and therefore this is a targeted response to an issue largely in the upper tiers of the London housing market. This prudent update to our lending policies is intended to manage risks to our business and for our customers.”
“The group continues to support the Help to Buy mortgage guarantee scheme as it has raised confidence in the housing market particularly outside of London. Help to Buy is not one of the factors driving London house prices. Just 2% of purchases in London in 2014 have been through the scheme with the significant majority of applications coming from the rest of the UK.”
The group expects this policy change to impact around 8% of our lending in London.
This policy change will take effect immediately and applies to mortgage lending through Halifax, Lloyds Bank, Bank of Scotland and Scottish Widows Bank.
