Halifax boosts maximum LTI to 5.5 times salary

From tomorrow, Halifax will be changing some of the loan to income limits applied to its affordability calculations.

Related topics:  Mortgages
Rozi Jones
20th October 2021
Halifax
"Whilst this may seem significant for those earning over £75k, who want to borrow 5.5x their income, I'm not sure they're the ones who need the most help."

Where income is above £75,000 and the LTV is under 75%, for loans up to £1m, the maximum LTI is being increased from 5.00x to 5.50x.

Mortgage broker Jamie Thompson commented: "There’s all this talk about house prices falling after the flurry of purchases in the past 12 months. But that took place while it was relatively hard to get a mortgage. With high income earners now able to borrow 5.5 times their income on the high street, this will help to maintain price growth as buyers have more ability to increase their bids, especially as it much easier to borrow at high loan-to-values today than it was this time last year."

Rhys Schofield, managing director at Peak Mortgages and Protection, said: "It's a positive move that reflects the reality that higher earners have more disposable income, and lenders such as HSBC have been doing this for quite some time. It's scant help, however, for hard-pressed regular earners who can comfortably manage higher rent payments already but to whom the mortgage affordability gods say no."

Lewis Shaw, founder and mortgage expert at Shaw Financial Services, added: “Whilst this may seem significant for those earning over £75k, who want to borrow 5.5x their income, I'm not sure they're the ones who need the most help. The last thing we need at the moment is the ability of borrowers to push prices even further upwards with higher loan-to-income multiples. The knock-on effect could further alienate and price out first-time buyers who are already stretched to breaking point if prices rise with the availability of more credit. Not to mention that affordability for people earning less than £40k has been reduced in the same breath. When will people realise that rising house prices make everyone poorer, not better off?”

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