High street lender increases borrowing limits for joint applicants
Santander will increase its maximum loan-to-income (LTI) ratio to 5.5 times for certain joint applicants, allowing some high-earning households to access up to 24% more borrowing.
Effective from tomorrow, August 12, the bank will adjust both its repayment and interest-only LTI multiples.
For joint applicants with a combined income of £100,000 or more, the LTI cap will rise to 5.5 times for repayment mortgages up to 90% loan-to-value (LTV) and for interest-only loans up to 85% LTV. Applicants with joint incomes between £45,000 and £100,000 will see the LTI limit increase to 5 times for the same LTV thresholds.
Santander said these changes mean that, for 75% to 85% LTV, joint incomes of £100,000 or more could borrow an additional 10%. For 85% to 90% LTV, joint incomes between £45,000 and £100,000 could borrow an additional 12%. For 85% to 90% LTV, joint incomes of £100,000 or more could borrow an additional 24%.
“We’re improving our loan to income multiples – this, together with our March affordability rate improvements, means we could help many more of your clients secure the mortgage amount they need,” Santander announced.
Several lenders have increased their loan-to-income limits in response to regulatory changes. Suffolk Building Society, for example, updated its lending policy today to enable first-time buyers to borrow up to 5.49 times their income. The moves follow recent guidance from the Prudential Regulation Authority, which has encouraged lenders to offer more high LTI mortgages.
In March, Santander has reduced its residential affordability rates by up to 0.75%, making it the first major lender to respond to guidance from the Financial Conduct Authority, urging lenders to make greater use of flexibility within existing mortgage regulations, particularly around interest rate stress testing.
“The recent changes to the loan-to-income rules mark the latest in a series of affordability improvements in what is quickly becoming the ‘year of the buyer’,” said David Morris, head of homes at Santander UK, said.
“We’re pleased to reflect these changes in our policies which, when coupled with our recent changes to affordability and a record number of properties coming to the market, will hopefully help more would-be buyers access the money they need to buy the home of their dreams.”
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