Securing a home loan is about to get more difficult for new borrowers, as two main UK mortgage lenders’ change their lending policies.
Abbey, part of the Santander group and the second largest UK lender, is rejecting applications for mortgages which have come via a mortgage broker. The lender has claimed to dismiss those applications that have errors or any spaces left on the form.
A statement issued from Abbey stated: "We are getting a high volume of applications through mortgage brokers which are incomplete or contain incorrect information. Consumers should work closely with their financial adviser to ensure that all relevant details and information required to submit a complete application are available to their broker."
The UK’s biggest lender, Halifax, has put up the cost of mortgage deals for existing customers, as well as measures introduced last week to elevate costs for new customers. A five-year fixed mortgage for 90% of the mortgage value was put up by 0.75%. While this may not seem like a large change, it may affect consumers who are already struggling with their debt management.
Royal Bank of Scotland (RBS) have also changed their lending policy, and will now consider only 25% of performance-related bonuses which have to be averaged out over 2 years. Share related bonuses are also being excluded from applications. A spokesperson for RBS has said:
“We constantly review our internal guidelines to ensure the amount of previous discretionary bonuses eligible for consideration is appropriate to the current economic outlook, recognising our duty as a responsible lender and our customers’ needs."
Despite recent talks of ‘green shoots’ for the economy, it seems that lenders are further tightening their outgoings by placing more and more restrictions on lending, making it harder for new borrowers to purchase a property.
The Director of Savills Private Finance commented on the situation yesterday; "While market conditions may be improving and the bottom of the market seems to be in sight, lenders still haven't regained their appetite for lending. If this situation does not change, it will hamper recovery."