Barclays has taken brokers by surprise after backdating a change to its lending criteria.
On September 4, Barclays lowered its maximum loan-to-income multiple from 5.5 times to 4.49 times for residential applications.
While changes to lending criteria are not unexpected, the lender also implemented its updated maximum income multiple on submitted applications that had yet to receive an offer, in a move brokers called “unusual”.
Rob Gill, managing director at Altura Mortgage Finance, said it was “very unusual” for a lender to apply new criteria to submitted applications, saying he hoped the move was “a one-off”.
Mr Gill commented it had “long been” part of the understanding between a client, broker and lender that once an application was submitted, the rate and terms were “secured”.
He claimed he knew brokers who have had to find new lenders for affected clients, which “could be hugely disruptive to the timeframe for any purchaser, and very stressful in such a competitive... market”.
Phil Leivesley, sales manager at Monica Bradley Associates, acknowledged lenders could change their criteria at any time, but added: “[A] mortgage adviser will submit an application to a lender in good faith, assuming a case will be accepted if it meets the criteria.
“For a lender to then shift the goalposts is not just disappointing, but a worrying precedent.”
In an email to brokers seen by FTAdviser, Barclays also said where a “material change” was required to an application that had been offered but was yet to complete, its new policy would apply if the change was requested after August 28.
Some of the material changes listed included increases to the mortgage term, the loan amount and the loan-to-value.
Sebastian Riemann, financial consultant at Libra Financial Planning, agreed it was “unusual” for lending criteria updates to be implemented retrospectively, but noted lenders were “always at liberty” to make changes.
Data from search system Knowledge Bank revealed approximately 233 changes to criteria in the residential mortgage market between August 31 and September 4.
chloe.cheung@ft.com
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