Lloyds cracks down on interest-only
Currently the Halifax brand offers LTVs up to 85% on interest-only, while BM Solutions already has a maximum LTV of 75%.
Cheltenham & Gloucester for intermediaries will cease trading from tomorrow and will be unaffected by the change.
Lloyds said the change at Halifax brought interest-only LTVs “very much into line with the market”.
The group announced in May last year it would no longer offer interest-only deals for loans more than £500,000 and said at the time they would “continue to look at interest-only on an ongoing basis”.
Mike Jones, sales director for mortgages at LBG, said: “We’ve had a series of changes on interest-only. They’re not all negative and they won’t all be negative in the future. But we are getting to the end of this process of aligning our brands.”
David Hollingworth, head of communications at broker London & Country, said: “This kind of alignment across the group and also into line with other lenders just goes to show there’s continued caution around interest-only deals. This move narrows the options for those looking to get an interest-only deal though and it will have a big impact on borrowers.
“There’s also the existing customer base on interest-only deals and when they review their mortgage situation when the time comes to remortgage, the landscape will look very different for them.”
Mike Fitzgerald, director of Essex-based broker Brentwood Financial, said it was a retrograde step for the market.
“There was a bit of a furore over interest-only last year about whether they’d be banned under the Mortgage Market Review but the Financial Services Authority seems to have softened their approach since then. Interest-only can be disastrous for the wrong borrower but perfect for the right people – especially those with lumpy incomes who want to overpay after bonuses for example,” he said.
Paul Broadhead, director of mortgage policy at the Building Societies’ Association, added: “The FSA is clearly concerned about interest-only and I can understand why they are looking at it. But I am not sure what problem they’re trying to fix. It’s therefore unsurprising that lenders are moving ahead of the FSA on changes to interest-only criteria because they’re expecting change and want to shape their own books.”