Calls grow to relax lending restrictions
Skipton Building Society (Skipton) has announced changes to its residential mortgage lending criteria, aimed at improving affordability for homebuyers. The revisions, which take effect from Monday, June 9, come alongside renewed calls from the mutual lender to reform a key industry cap on mortgage lending.
The society has lowered its residential stress rates for mortgage products under five years, making shorter-term loans more affordable for prospective borrowers. It also halved the income threshold needed to access higher loan-to-income (LTI) lending—from £100,000 to £50,000—and increased the maximum LTI for borrowers with high loan-to-value (LTV) ratios. For those with LTVs between 90.01% and 95%, the LTI cap has risen from 4.75 to 5, provided household income exceeds £50,000.
Charlotte Harrison, CEO of homes at Skipton, said the changes could boost borrowing power by up to £45,000 for typical households earning £60,000. “We continue to support calls for a review of the LTI flow limit,” she said. “In the meantime, as part of our commitment to supporting more first-time buyers, we’re making changes to the stress rate, lowering the income requirement to access larger loans.”
Skipton’s announcement comes as it joins Yorkshire Building Society and Nationwide in urging the Bank of England to revise its 15% cap on higher LTI lending. Under current rules, only 15% of new mortgage lending can exceed 4.5 times a borrower’s income. Skipton argues that raising the cap to 20% would offer critical support to first-time buyers and align with government goals to boost housing supply and expand the mutual sector.
In a joint letter to Dame Meg Hillier MP, chair of the Treasury Select Committee, the three mutual CEOs called for reform of the cap, citing its impact on housing accessibility.
“Higher LTI lending is subject to the same robust affordability assessments,” Harrison added. “Our experience is that customers demonstrate the same, if not higher, levels of creditworthiness.”
Skipton maintains that these changes will enable it to responsibly help more people onto the property ladder amid growing affordability pressures.
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