The LTI will give “more financial firepower to first-time buyer[s] to help them get on the property ladder, while maintaining a strong commitment to responsible lending”.
The increased LTI will be available to first-time buyer applicants who meet specific criteria.
For a sole applicant, the minimum income is £35,000, while the minimum income for a joint application stands at £55,000. This will be alongside a “core affordability assessment ensuring appropriate lending [that] is sustainable over the long term”.
A spokesperson suggested that for sole applicants, they might be able to borrow just over £35,000 more, and for joint applicants, there is the potential to borrow just over £55,000 more.
HSBC UK said that for borrowers moving home or remortgaging with an income of £45,000, there are also income to LTI multiples ranging from five times income to 5.5 times income, depending on loan to value (LTV) and income.
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Oli O’Donoghue, HSBC UK’s head of mortgages, said: “There are significant challenges facing first-time buyers today, from finding a deposit that is likely to be tens of thousands of pounds to rising property prices. By increasing our LTI multiple, we aim to provide extra support to those who are ready to take this important step. Affordability remains central to every lending decision, but extending our lending limits will provide extra firepower to those looking to get onto the property ladder.
“A higher LTI multiple allows us to consider a broader range of applicants, but every mortgage application will still be individually assessed to ensure the borrower can comfortably manage their repayments, even in a changing economic environment. Our commitment to responsible lending is unwavering, and we believe this new policy strikes the right balance between helping aspiring homeowners and protecting them from financial hardship.”
Several lenders have been increasing their LTI multiples in the past few months following the clarification from the regulator, including Santander, Lloyds Banking Group, TSB, Suffolk Building Society, West Brom Building Society, and Nottingham Building Society.
The move has been welcomed by brokers, but some suggested in our latest Marketwatch that borrowers may be wary of borrowing up to the full LTI limit.
