Barclays yesterday raised its Loan to Income multiple to 4.49 across all its mortgages, meaning that customers including first-time buyers can borrow up to 4.49 times their annual income.
Until yesterday, it allowed 4.49 Loan to Income for those earning over £50,000.
For those earning less, the maximum Loan to Income was four times annual earnings.
Barclays’ move comes after the Bank of England warned of ‘riskier’ lending.
The Bank said earlier this month it was concerned that 27% of borrowers are stretching themselves to take out mortgages more than four times their annual income.
Banks are not allowed to hand out more than 15% of their total lending to mortgage customers wanting to borrow over four-and-a-half times income. The Bank’s concern is the sharp rise in lending at just under this level.
Comments (6)
Surely to the income multipliers mean diddly. Shouldn’t it be more based on affordability? If someone can afford to pay £750pcm for a rental, then they can pay £600 a month for a mortgage?
4.49 but still subject to affordability .stop talking rubbish
My understanding was that the BOE brought in a guide/demand beginning April 2016 that all mortgage lending from then had to be no more than 5.25 times salary with a maximum of 15% of their loan books being above this and from April 2018 under 4.5 times Again with no more than 15% above this so eventually the banks have restricted their loan risk and in turn managed to help slow down the house price increases, of course it has also slowed down supply and sales because you can’t get silly multiples of salary for a mortgage and I say good, it will stop a lot of debt and repossessions and will give everybody better value in their buying on the house market, if only the greedy would see that!
Is this a desire to make money from repossessions as interest rates are about to rise? Or will it be seen as helping first time buyers?
If you think that lenders make money from repossessions, you are mistaken.
Here we go again then, the start of the slippery slope, when will these people ever learn? But of course they have learned, they don’t care about anyone bar themselves and their shareholders, why should they, their job is to run a profitable business. But if people are bothered by house prices and recessions then more forceable lending criteria needs to be put in place, and the BOE/Government need to crack down on it. Restrict supply of mortgages and you restrict supply of buyers thus house prices are easier to control. No this isnt exactly how a free market should work, but the alternative is a tad scary.