Lloyds Banking Group will make an extra £4bn of lending available to high loan-to-income first-time buyers, following recent mortgage lending reforms.
The group will extend its First Time Buyer Boost product, which is available through Lloyds Bank and Halifax.
It has increased the loan-to-income on this product to 5.5 times from 4.5 times, which the business says increases the available borrowing by 22% for FTBs.
It says that a household income of £50,000 and a deposit of 10%, will lift the maximum loan available from around £224,500 to around £275,000.
To qualify for a First Time Buyer Boost, subject to affordability, customers must:
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Apply for a first-time buyer mortgage with Halifax or Lloyds Bank
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Have a total employed household income of £50,000 or more
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Have a loan-to-value of up to 90%
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Not use shared ownership or shared equity
Lloyds Banking Group homes director Andrew Asaam says: “Recent affordability changes have already started to help would-be homeowners get on the property ladder sooner and lending an extra £4bn means we can help even more customers get the keys to their first home.”
The move comes after the Financial Policy Committee in July confirmed that large and smaller lenders would be able to underwrite more loans at over 4.5 times a buyer’s income.
The Financial Policy Committee said that large lenders will be able to lend over 15% of overall new home loans at high loan-to-income levels, as long as the aggregate flow of this high loan-to-income lending remains under 15% among large banks overall.
Previously, no large bank could top the 15% rule. This left a situation where some banks threatened to breach this level, while others were comfortably under this level.
A range of other lenders, including Nationwide, Santander and Accord Mortgages, have also boosted their loan-to-income ratios.
