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Barclays caps LTIs above 80pc LTV

Sarah Davidson

January 16, 2015

Previously borrowers were capped on LTIs over 85% LTV, as borrowers earning less than £50,000 could borrow four times LTI while those who earned less than £50,000 could borrow 4.5 times.

Under 80% LTV the LTI cap remains at 5.5.

A Barclays spokesperson said: “As of 13 January, our LTI criteria on residential applications will be capped at a maximum of 4.5 for all loans with LTV thresholds greater than 80%.

“This change is part of our on-going business planning and something we always keep under review.”

The Bank of England limited loan to income ratios above 4.5 times to 15% of residential mortgage applications in June 2014, while in response RBS, Lloyds, NatWest and Nationwide all introduced their own caps.

Ray Boulger, senior technical manager at John Charcol, said: “Perhaps Woolwich felt they were getting too close to the 15% limit and they wanted to mitigate the risk.

“It’s not a major problem as things stand as other lenders are still lending at higher income multiples.”

He named RBS, NatWest and Santander as some of the best lenders to use instead if necessary.

But according to Boulger capping higher earners makes no sense from an underwriting perspective.

He added: “The higher income the more viable it is to have a higher income multiple, so from a purely sensible underwriting perspective it makes no sense to cap higher earning people.

“Some of these measures have been done to meet the requirements from the Bank of England rather than take into account common sense underwriting.

“In the past some lenders have applied a higher income multiple to higher earning people.”


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