You are here: Home - Mortgages - First Time Buyer - News -

Mortgage lenders offering higher loan to income mortgage ratios

0
Written by:
17/01/2018
Lenders are offering more generous loan sizes compared to income, with one provider now offering up to six times earnings.

Lenders are taking a more relaxed attitude towards higher loan to income (LTI) ratios, as buyers struggle with affordability following years of house price growth outstripping wage rises.

Prudential Regulation Authority (PRA) rules state that mortgages with an LTI of more than 4.5 can’t make up more than 15% of lenders’ overall new loans.

But it appears that within the portion of higher LTI loans, lenders are willing to offer relatively higher value loans.

At least one provider is now offering a limited amount of lending at up to six times income at up to 85% loan to value (LTV), according to reports from brokers.

It comes as the average LTI to first-time buyers reached 3.64 in November last year, up from 3.54 a year earlier, according to the latest UK Finance data.

Home movers’ typical LTI has jumped to 3.41 from 3.27, over the same time period.

Mark Harris, chief executive of SPF Private Clients, said: “It is not surprising that higher income multiples are on the rise given that the long-term trend for property prices is upwards and with salaries failing to keep pace.

“Furthermore, with rates still at historic lows, borrowers maybe tempted to borrow more to take advantage of cheap rates.”

Andrew Montlake, director at broker Coreco, added: “I think lenders are becoming more comfortable with the way they assess affordability and so income multiples as such are becoming less important, however many are still uncomfortable going over 4.5 or 5 times income.

“With the 15% rule still in place it does not look like there will be any fundamental changes to this any time soon.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
burglar insurance cover
Revealed: UK’s burglary hotspot

The town of Guildford in Surrey is the UK’s burglary claims hotspot, according to MoneySuperMarket.

Close