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Halifax increases loan to income caps for high LTVs

  • 06/04/2022
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Halifax increases loan to income caps for high LTVs
Halifax has increased the loan to income (LTI) cap for borrowers taking out 85 to 90 per cent loan to value (LTV) mortgages.


Where the borrower’s income is more than £75,000 and the loan amount is less than or equal to £500,000, Halifax can lend up to 4.75 times a borrower’s income instead of the previous 4.49 ratio.

These changes will apply to decisions in principle keyed in from today.

Affordability changes

Halifax is not the only lender to make adjustments to its affordability, as these changes follow Santander’s decision to include increases to national insurance, household expenditure and dividend income tax rates in its assessment.

Santander will also factor in changes to tax bands in Scotland. Further, five-year fixed, like-for-like remortgage and retained property residential stress rates have gone up.

Mortgage Solutions asked a number of lenders if they would follow suit and adjust affordability criteria or calculations.

A spokesperson for HSBC said the bank’s mortgage lending decisions were already “based on affordability” and assured it recognised the current pressure on household budgets.

Nationwide said that as a responsible lender it’s important to ensure members could afford mortgage payments both now and in the future.

A spokesperson for the mutual added: “Our affordability calculation aims to ensure members have a sufficient proportion of their income remaining, after their mortgage repayments, to cover their outgoings. We take a range of factors into account, including average household living costs, to determine how much can be borrowed.

“The costs and assumptions used are reviewed regularly to ensure they are as accurate as possible and reflect the latest economic conditions.”

Ben Merritt, director of mortgages at Yorkshire Building Society, said the mutual regularly reviewed its affordability models.

He added: “As a responsible lender it’s important we do not lend more to borrowers than they can comfortably afford to repay, so we’re considering any changes we may need to make to our affordability assessments in light of the rising cost of living to make sure borrowing remains manageable for homeowners.”

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