Building Society heads attended a Downing Street reception this morning as mutuals continue to campaign for higher loan-to-income flow limits to allow them to boost borrowing.
Skipton chief executive Stuart Haire (pictured) and Building Societies Association chief executive Robin Fieth were among the senior figures at a general No 10 meeting for mutuals and co-ops.
However, the reception comes as building Societies step up their push to raise lending caps for borrowers.
Under the current LTI rules, set by the Bank of England Financial Policy Committee, new residential mortgage loans are capped at, or greater than, 4.5 times salary to no more than 15% of total home loans a year.
But last week, Nationwide, Skipton and Yorkshire building societies jointly wrote to Treasury Committee chair Meg Hillier “to collectively reinforce” the need for the limit to be raised to 20% from 15% to allow them to lend to more potential homeowners.
The letter, dated 5 June, followed evidence given to the committee from the leaders of all three mutuals on 21 May.
In February, Nationwide called for a review of LTI limits, citing its Helping Hand mortgage, which accounted for 23% of Nationwide’s first-time buyer mortgages last year, which had to be curbed in January to stay within regulatory lending rules.
Nationwide director of home Henry Jordan said at the time: “We are at the limits of where we can take this product. We have not named a particular threshold but, if the limit was lifted to, say, 20%, we could fund another 10,000 FTBs over the next year.”
The Financial Conduct Authority launches its second consultation into relaxing the mortgage market this year this month, which its says will be more “wide-ranging” than the paper earlier this summer.
However, both Bank of England governor Andrew Bailey and Financial Conduct Authority chief executive Nikhil Rathi told MPs earlier his year that raising LTI limits carries the risk of lifting home repossessions and raising house prices.
