Lloyds Banking Group reduces the size of new mortgage loans

Two major lenders have restricted the size of new mortgage loans and others could follow suit.
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Lloyds Banking Group, which includes Halifax and Scottish Widows Bank, is restricting its loan-to-value ratio to 60 per cent, which means new borrowers must find a 40 per cent deposit.

Lloyds has also applied the restriction to remortgage deals, which means you need at least 40 per cent equity in your home to get a loan.

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Barclays has withdrawn the most of its mortgage deals above 60 per cent loan-to-value, while smaller lenders are also reducing their loan-to-value ratios and some have stopped accepting new mortgage applications.

Lloyds Banking Group offices, HalifaxLloyds Banking Group offices, Halifax
Lloyds Banking Group offices, Halifax

Andrew Milnes of the Mortgage Advice Bureau, Bingley, says: “M & S Bank, which is part of HSBC, has cancelled all mortgage cases this morning (Thursday) where an offer has not been issued and is the first lender I have heard of doing this. I would guess that there aren’t huge numbers of people affected by this cancellation but none-the-less, it is a big impact if it affects you. It’s to be hoped that more lenders don’t follow suit here.”

He adds that most lenders are still providing a service but valuation and condition surveys, where a surveyor visits a property, have ceased for the time being. “Many lenders have automated valuation models they can use which is a positive so hopefully this will not lead to the market grinding to a halt, though many solicitors are advising clients to be very cautious about exchanging legally binding contracts at the moment.”