The UK mortgage market is experiencing a significant shift, with the number of lenders offering a loan-to-income (LTI) ratio of six times or more quadrupling. This change follows a relaxation by the Financial Policy Committee (FPC) regarding the high LTI flow limit for lenders, enabling more borrowers to access higher loan amounts.
Why Are More Lenders Offering Higher LTI Ratios in the Mortgage Market?
The FPC’s recent policy adjustment has allowed multiple lenders to raise their maximum LTI multiples. Major banks have adopted this change over the past year, reflecting a growing willingness among lenders to accommodate borrowers looking for larger loans. The average LTI sought by borrowers has also risen, indicating a shift in borrower demand.
What Does This Mean for Borrowers in the Mortgage Market?
For borrowers, the increase in lenders offering six times LTI is a positive development, as it reflects a more accommodating mortgage market. Despite this, a significant proportion of borrowers seeking this level still struggle to find eligible lenders, although this is an improvement from the previous year. The average maximum loan amount offered has also increased, suggesting that lenders are becoming more flexible in their lending criteria.
What This Means for Brokers and Investors
Brokers should be aware of the changing market, as the proportion of cases requesting higher LTI ratios has increased. This trend indicates a shift in borrower expectations and needs, which brokers must adapt to. Investors may also find opportunities in this evolving market, particularly in identifying borrowers who require higher LTI ratios.
Frequently asked questions
How has the LTI ratio change affected mortgage availability?
The change has led to more lenders offering higher LTI ratios, increasing the availability of larger loans for borrowers, though many still face eligibility issues.
What should borrowers do if they can’t find a lender?
Borrowers struggling to find a lender offering a six times LTI should consider consulting a mortgage broker for tailored advice and to explore alternative lending options.