Lloyds sets mortgage cap as London property fears rise
In all this excitement about unaffordable housing driving a property bubble, let’s not forget that rural housing in some places, stimulated by a chronic lack of supply, is equally to blame!
Britain’s biggest mortgage lender day raised the alarm about soaring house prices in London, imposing new restrictions on its lending policy.
Lloyds Banking Group, owner of the Halifax mortgage brand, is to cap applications for mortgages of more than £500,000 at no more than four times a borrower’s salary. The average house price in London, according to the Office for National Statistics (ONS), is £459,000
The move by the bank, partly owned by the taxpayer, came two days after the Bank of England governor, Mark Carney, had pinpointed large mortgages of up to five times income as a cause for concern that “could store up bigger problems for the future”.
Lloyds made its announcement – which sparked speculation that rivals would follow suit – after fresh data from the ONS showed London property prices had rocketed by an average 17% over the past year.
Stephen Noakes, director of mortgages at Lloyds, said the decision to limit lending was to address specific inflationary pressures in the capital, where house prices are up 30% from their 2007 peak.
“This is largely driven by issues of supply which are particularly acute in London.”