From tomorrow (12 October), Natwest Intermediary Solutions will reduce the maximum loan-to-income caps on residential mortgages below 85 per cent loan-to-value.
The maximum LTI on loans of 75 per cent or lower will be cut from 4.99 to 4.45 times income, while loans between 75.01 and 85 per cent LTV will be subject to a new maximum of 4.45 times income; reduced from 4.49.
The lender stated there will be no changes to the maximum LTIs on loans above 85 per cent LTV, which remain at four times income.
A spokesperson for Natwest said: “Following a recent review of our business mix, we have made some adjustments to our loan to income maximums for mortgage applications of under 85 per cent LTV to 4.45 times income.
“The loan to income maximum is just one measure we use to assess affordability and the changes have been incorporated into our affordability calculator that is automatically applied to the result a broker will get on screen.”
David Hollingworth, associate director for communications at London & Country Mortgages, told FTAdviser that the move underlines the fact that while affordability remains the key focus for lenders, they will still need to ensure that they are getting the right mix of business and remain within the regulator’s confines when it comes to higher income multiple lending.
He said: “As a result, some borrowers may sail through an affordability test but find their borrowing capacity hits a ceiling determined by a maximum loan to income multiple.”