Lloyds Banking Group has tightened its mortgage lending criteria in a move designed to take some of heat out of the rapidly increasing London property market.
Anyone applying to Lloyds for a mortgage over £500,000 will be subject to new affordability rules capping the maximum amount they can borrow to four times their single or joint income. This is down from the more normal limit of five times income.
The Lloyds changes will apply to the whole group including Halifax, Lloyds Bank, Bank of Scotland and Scottish Widows Bank. It is thought the policy change will reduce Lloyds' lending in London by approximately 8%.
Stephen Noakes, Lloyds group director of mortgages, told Mortgage Strategy magazine that while the housing market outside of London is fragile and prices largely remain below their peak, within the capital house prices are almost 30% above the 2007 peak.
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