The bank said it was suspending lending at 90 per cent LTV to watch how the market developed following the end of Help to Buy and the launches of new schemes. This limit on new-build houses puts maximum lending in line with the 85 per cent LTV cap on new-build flats.
In a note to brokers, TSB wrote: “Support of the new build sector remains strategically important to us and we’ll continue to innovate in this market and will keep you updated on our proposition through Q1.”
Affordability changes
TSB also made changes to its self-employed income criteria and buy-to-let stress rates, which it said reflected current market conditions.
The maximum loan to income limit for self-employed applicants earning more than £60,000 and requiring loans of 85 per cent LTV or less has been lowered from five times income to 4.49 times income. This remains at five times income for employed borrowers.
For loans above the 85 per cent LTV tier, the income multiple is 4.49 times income and at 95 per cent LTV, this is 4.25 times income.
Further, TSB has increased the stress rate for background buy-to-let mortgages from 5.5 per cent to seven per cent.
Sign of lender caution
Brokers said the changes made by TSB were penalising the self-employed and noted that it showed a lack of confidence in some areas of the market.
Jamie Lennox, director at Dimora Mortgages, said: “These changes certainly signal to the industry that there are concerns about house prices dropping and the real risk of negative equity.
“With new builds typically costing a premium, there is a greater risk to the bank if they have to repossess the property that the ‘new property premium’ is lost and results in it being worth less money on the resale market.”
Amit Patel, adviser at Trinity Finance, said: “Self-employed borrowers, it appears, have been dealt another hammer blow with this decision. They are the backbone of the economy and lenders need to do more to help them.”
Austyn Johnson, founder at Mortgages For Actors, said the self-employed were being “penalised again” and suggested that it would be better to take the time to understand an applicant’s situation.
He added: “Self-employed people are more of a secure bet as long as they are still trading successfully.”
