Halifax is urging the Council of Mortgage Lenders (CML) to take action against lenders that discriminate against certain postcodes when granting large loans.
The move follows news that NatWest and Alliance & Leicester have imposed stricter limits on loan to value (LTV) ratios in certain property hotspots. The lenders claim that lending limits are there to protect borrowers from over-stretching themselves should house prices fall.
However, Halifax said that postcode discrimination works against the affordability mechanism in place, ignores market forces and does not spread risk equally between lenders.
Mark Hemingway, head of media relations at Halifax, said: ‘A lender should not dictate where a borrower can or can not buy a house. Many first-time buyers are unable to get on the first rung of the housing ladder ‘ it is difficult to see why a prohibition on lending above certain LTVs in certain areas could do any good.’
Alliance & Leicester said certain areas had been blacklisted to protect borrowers against negative equity.
Andy Homer, spokesperson for Alliance & Leicester, said: ‘We have revised our lending policy on properties worth between £100,000 and £250,000 in London and the South East and will now lend up to 90% of the property values in this region. The decision provides customers with extra financial security should house prices fall.’
NatWest’s spokesperson, David Outhwaite, said that LTV limits would be cast on individual cases and blacklisted areas were liable to change over time, so no postcodes could be confirmed. ‘We are taking a responsible attitude to lending. It will only affect areas where there is a disproportionate increase in house prices,’ he said.
The CML said it would monitor the problem if the move by the two lenders affected the rest of the lending community.
