Affordability crunch leads to banks increasing minimum loan

An affordability crunch brought on by soaring inflation has led to Britain's biggest banks targeting wealthy mortgage borrowers.

 

Experts suggest many lenders are vying for the most affluent homeowners as poorer households struggled to pay their bills. This month, Halifax increased the minimum loan size from £25,000 to £100,000 on its two and five-year remortgage deals.

 

The move follows a precedent set by NatWest, which relaxed its lending limits for wealthier borrowers and will now offer a mortgage of up to five-and-a-half times their annual income to those who earn more than £75,000 per year. 

 

The new rules apply to mortgages sold using a broker, and joint applicants must have a combined income of at least £100,000 a year. NatWest has also increased its maximum loan size for wealthy borrowers. A £10m lending cap was previously applied, however now those with a 40pc deposit can now borrow an unlimited amount. 

 

Customers with a 20pc or 15pc deposit can borrow up to £2.55m, an increase of £1.55m, and those with a 10pc deposit can borrow up to £750,000, which is a £200,000 increase on the previous terms. 

 

A spokesman for Halifax said the higher minimum loan size applied to certain deals sold through mortgage brokers, and the change would only affect a small amount of its overall mortgage lending. The lender said the changes were part of a "regular review" of its suite of products.

 

Experts said banks were turning their attention to richer homeowners who are likely to weather financial turmoil and rising interest rates better than poorer clients.

 

 

Collings Solicitors

Altrincham