The criteria change is effective from today and also applies to its interest-only lending on shared equity mortgages, but excludes buy-to-let loans.
Leeds – the fifth largest building society in the UK – only accepts two types of repayment strategies; the first, using a savings or investment vehicle and the other through the sale of property.
Where the repayment strategy is an investment or savings vehicle the maximum LTV is 75%. Any additional lending, above the 75% LTV maximum, can be advanced on a capital and interest basis up to 85%.
The society said that no further changes where the repayment strategy is an investment or savings vehicle have been made.
It added that no changes have been made to its packaging requirements and intermediaries continue to have 21 days to submit applications.
Phil Coombes, head of intermediary sales at Leeds building society, said: “Volumes of business do rise when other lenders make changes to their criteria. It’s about trying to protect your service levels and looking after your customers.”
Last week, Accord mortgages revealed to Mortgage Solutions how it had seen an uplift in interest-only applications after both Santander and Lloyds’ announced changes in this product area.
Lloyds announced it would no longer accept cash savings, including ISAs, as a suitable repayment vehicle and placed restrictions on using stocks and shares as a repayment vehicle. It also said that pensions must have a minimum current value of more than £1m.
This followed Santander’s move to cut the maximum LTV from 75% to 50% on interest-only loans.
Trade bodies have claimed that lenders have tightened their interest-only criteria amid fears that they risk being charged if a borrower’s repayment vehicle fails to pay back their interest-only loan.
