HSBC raises income multiple to 5.5 for high-earning borrowers
The update will come in on Monday. It is up from five times income borrowers in this bracket were previously able to borrow.
Over the course of this year, a number of lenders have increased the income multiples for those on higher salaries.
This included Metro Bank which widened borrowing limits for those earning more than £100,000 to five times their income. Barclays also adjusted its limits, allowing customers with a gross income of £75,000 to borrow up to five times their income. This was a similar move to Ipswich Building Society, which raised multiples to 5.5 for those earning £75,000 and more per year.
Speaking to Mortgage Solutions, HSBC said despite the change it would still look at all applications individually to ensure affordability is met.
Virgin Money extends 90 per cent LTV availability and tightens LTI
The bank came back into the 90 per cent LTV space in December with a five-year fix before adding more options this year.
The two, five, seven and ten-year fixes are no longer restricted to first-time buyers and the maximum property value Virgin will lend on has increased to £500,000.
Additionally, maximum mortgage terms at this tier have been extended from 25 to 30 years. Virgin Money will not lend to flats, maisonettes or new-build properties at 90 per cent LTV.
Virgin Money has also made significant changes to its affordability criteria.
The lender has tightened its loan to income (LTI) cap for all lending above 80 per cent LTV, reducing it to 4.49 times income.
However, this excludes remortgage applications with no additional lending, and its existing loan-to-income cap of 4.49 times income where the LTV is more than 85 per cent remains in place.
At the same time, it will increase the maximum LTI for all interest-only and part-and-part applications to 4.49x.
And in addition to basic pay, 100 per cent of pension and allowable benefit income will be used in the LTI calculation.
The changes come into effect on 4 March and follow revisions of Clydesdale Bank’s loan to income cap on self-employed applicants.
Self-employed find it tougher to achieve requested loan sizes – MBT
This was flat compared to December but a steady rise from April where applicants receiving requested loan amounts varied between 61 and 67 per cent. This suggested more lenders have been meeting the borrowing needs of self-employed applicants.
A quarter of cases in January were deemed unaffordable based on the clients’ required loan amounts while lenders were unable to lend on two per cent of cases.
Other borrowers better served
Although an increasing number of requested self-employed loans were approved, this was still below the market average.
In January, lenders were able to meet the loan requirements of 80 per cent of all mortgage cases, with 86 per cent of first-time buyers and remortgage customers respectively obtaining their requested amounts. For home movers, this represented 82 per cent of cases.
The average maximum loan size offered to self-employed applicants was £221,400 in January, a three per cent decrease from its peak in August. The minimum loan size was £118,000, 45 per cent higher than its lowest point in April.
Tanya Toumadj (pictured), CEO at Mortgage Broker Tools, said: “The latest MBT Affordability Gap data confirms that it is more difficult for self-employed clients to achieve their requested loan size, but that it is still possible, with the right research.”
Toumadj added: “There is a clear warning for brokers within the data. On the cases where there were no options available based on affordability, the difference between the loan requested and maximum loan offered was 25 per cent and this is the highest level we have known in any category since records began.
“For brokers who only try one or two lenders, this can give a false impression that they will not be able to achieve the required loan amount, even though they data says they probably will be able to do so if they shop around.”
“This is why whole of market affordability research is essential in helping brokers secure the best outcomes for their clients, especially self-employed clients where calculations can be more complex and more varied,” she said.
TSB and Accord add products; Newbury cuts shared ownership rates – round-up
TSB has added a five-year fixed purchase product to its range in the 60 per cent loan-to-value (LTV) range with a product fee of £1,495.
This product is available through intermediaries only and has a rate of 1.44 per cent.
The lender also made rate reductions to its two-, three- and five-year fixed products in the 95 per cent LTV band, with rates reduced by up to 0.15 per cent.
The rates across its two-, three- and five-year fixed remortgages in the 60 per cent LTV tier saw cuts of up to 0.10 per cent.
The deals include £300 cashback and no free legals, or free legals.
Nick Smith, TSB’s head of mortgages, said: “We’re seeing more customers demand longer-term fixed rate products, that’s why we have introduced a new five-year fixed rate.”
Newbury reduces shared ownership rates
Newbury Building Society has reduced rates on its 95 per cent LTV fixed-rate shared ownership mortgages.
The two-year fixed has been reduced from 3.79 per cent to 3.39 per cent, the three-year fixed from 3.79 per cent to 3.39 per cent and the five-year fixed from 4.69 per cent to 3.79 per cent.
The products are all application fee free.
Roger Knight, lending manager at Newbury Building Society, said: “As the shared ownership mortgage market grows, we are constantly looking for ways to enhance and develop our mortgage products in response to the needs of borrowers.
“We believe the reductions to our 95 per cent fixed rate mortgage products will help those who have smaller deposits fulfil their homeownership ambitions.”
Accord launches eight high LTV products
Accord Mortgages has released eight new products at 90 per cent and 95 per cent LTV.
It also reduced rates on certain existing 90 per cent and 95 per cent LTV fixed-rate products and increased the maximum borrowing amount from £500,000 to £600,000.
For purchase customers, the new products comprise:
- 90 per cent LTV two-year fixed rate at 2.30 per cent with £995 fee, free valuation and £500 cashback
- 90 per cent LTV five-year fixed rate at 2.53 per cent with £995 fee, free valuation and £500 cashback
- 95 per cent LTV two-year fixed rate at 3.06 per cent with £995 fee, free valuation and £500 cashback
For remortgage customers:
- 90 per cent LTV two-year fixed rate at 2.29 per cent with £995 fee, free valuation, free legals and £500 cashback
- 90 per cent LTV five-year fixed rate at 2.52 per cent with £995 fee, free valuation, free legals and £500 cashback
- 95 per cent LTV two-year fixed rate at 3.15 per cent with £995 fee with free valuation and free legals
And two new-build products were introduced: For house purchases, a 90 per cent LTV two-year fixed rate at 2.65 per cent, with £749 fee, free valuation and £1,000 cashback. And for flat purchases, a 90 per cent LTV two-year fixed rate at 2.95 per cent with £749 fee, free valuation and £1,000 cashback.
Both have a maximum loan size of £600,000.
The rate reductions apply to 90 per cent and 95 per cent LTV products.
- Two-year fixed rate at 90 per cent LTV at 2.44 per cent, down from 2.52 per cent, with £495 product fee, £1,000 cashback and free valuation
- Two-year fixed rate for remortgage customers at 95 per cent LTV at 3.26 per cent, down from 3.29 per cent, with £495 product fee, £750 cashback, free legal services and free valuation
Jemma Anderson (pictured), Accord product manager, said: “Having reviewed our range, we’ve reduced selected rates and launched new products to ensure we are fully supporting those wanting to borrow at a higher LTV whilst offering the most competitive choices for brokers.
“Increasing our maximum loan size to £600,000 at greater than 85 per cent LTV ensures we can provide the best options, regardless of geographic location and help more people to purchase the property they want.”
Maximum borrowing most searched term in December – Knowledge Bank
Maximum age at the end of the term was the most searched term in residential mortgages, followed by self-employed applicants with just one year’s accounts.
Help to Buy remained in the top five residential searches for the second month in a row, since making its first appearance in November.
Capital raising and debt consolidation broke into the top five broker search terms for the first time, indicating that some borrowers already knew that they were over-spending even ahead of Christmas happening and were already planning how they were going to pay for it.
First-time landlord within top five broker search terms
In the buy-to-let sector, lending to limited companies was the biggest broker search term, followed by first-time landlord and requirement to be a homeowner.
In equity release, for the final month of the year lenders who would lend to non-borrowing occupiers broke into the top five broker search terms, followed by those who would lend on Grade 2 listed buildings.
Regulated bridging tops the table
Lenders who offer the highest LTV continued to be the top search in the second charge sector, followed by lenders who would consider applicants with all benefits with no earned income.
Within the self-build sector, maximum LTV remained the top search for a second month in a row, suggesting that borrowers are continuing to stretch their finances to make the self-build dream a reality.
December’s index revealed that regulated bridging was the top search within the bridging sector for the third time in four months.
Product innovation was the stand out change in 2018
Nicola Firth, CEO of Knowledge Bank (pictured), said : “During 2018, new lenders entered the market but it was product innovation that really was the stand out change.
“With interest rates remaining low, lenders continue to compete on criteria in addition to rate which makes it increasingly difficult for a broker to know who will or won’t accept their client.
“This product growth was coupled over the year with borrowers having increasingly complex property and financial circumstances. On average brokers searched on five individual pieces of criteria for each borrower which shows how essential it is for a system to ensure that cases are not sent to lenders who will inevitably turn them down.”