Yorkshire Building Society is directly responding to the regulator’s relaxation of limits on higher- loan-to-income (LTI) lending, with swift enhancements to its product offering.
The financial services regulators announced last week that they are to review the 15% limit which governed how many mortgages lenders can offer at higher LTIs (above 4.49x income). Lenders have been given the freedom to set their own responsible lending limits while the review takes place, something which the Society has long lobbied for.
Introducing the changes first through its intermediary-only lending arm Accord Mortgages, the Society is extending its popular ‘Boost LTI’ product, which provides access to mortgages up to 5.5x income, to first-time buyers borrowing 95% loan-to-value, from 16 July, as well as reducing the minimum income threshold for this product from £75,000 to £50,000.
The Society will also reduce its minimum income threshold for lending up to five times income from £75,000 to £50,000.
Several further planned enhancements are scheduled and will be made available to direct customers before the end of the month.
Ben Merritt, director of mortgages for Yorkshire Building Society, said: “Last week’s announcement by the regulators was exactly what we have been campaigning for, to loosen the shackles and enable us to support even more borrowers – and particularly first-time buyers, in being able to buy homes.
“The simple fact is that there are customers, including first-time buyers, who can afford to borrow more than 4.5 times their income, who have been shut out of this market by the existing regime. We can now offer them a lifeline to borrow what they need for their dream home in line with our commitment to responsible lending.
This is crucial in the current economic environment where house prices in many parts of the UK continue to rise at a faster rate than incomes.”
Commenting on the new product offerings, Ben added: “We have been preparing new offerings in anticipation, which will cater for the significant proportion of borrowers out there who are very creditworthy but, under previous rules, struggled to borrow enough to cover the cost of their desired homes.
“While we are still awaiting clarity on exactly what the new higher-LTI lending limit will be following the review, we will continue to campaign and work with regulators to ensure our borrowers’ needs are represented, while in the meantime doing everything we can to enhance their access to suitable solutions.”
Other innovations we have launched to help borrowers overcome some of the biggest barriers, have included our £5k Deposit mortgage, which enables them to buy a property worth up to £500,000 with just a £5,000 deposit.
Earlier this year, we also responded to the regulator’s clarification of its rules around affordability calculations by lowering our interest rate stress test which governs how much we will lend to borrowers, meaning we can lend borrowers on average 15% or £37,000 more.
