Lloyds and Halifax praised over new mortgage rules which are 'big move'

Lloyds is increasing the maximum sums it is willing to lend first-time buyers in a £2 BILLION move. And praising the high street bank, experts say the move will bring home ownership within the reach of more people but could further increase house prices.

Lloyds Banking Group’s decision to let people borrow more means those who meet the criteria may be able to buy a property they might have assumed was well out of their price range. Lloyds and Halifax brands will allow new buyers to take out loans worth up to 5.5 times their household annual income.

That's up from 4.49 times, and higher than the traditional maximum. As a result of the changes, the maximum sum a buyer with an income of £50,000 can borrow will rise from £224,500 to £275,000 – a 22 per cent increase.

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Lloyds said it was “tough right now” for those hoping to get on the ladder. Riz Malik, director of broker firm R3 Mortgages, said Lloyds/Halifax was “leading the charge in getting first-time buyers on to the property ladder”. He added: “The recent rate cuts and being more flexible on lending criteria create the perfect environment to kickstart the UK’s housing market.”

Tony Castle, managing director at PFG Mortgages, said: “Lenders like Halifax making big moves with 5.5 times income will really help drive the property market in the right direction.” He added that it was a decision “that could trigger other lenders to follow in their footsteps”.

Halifax said: “We are pleased to announce we have made £2 billion available for first time buyers (FTBs) who need to borrow at least 4.5 times their annual household income through our new proposition First Time Buyer Boost. We know that one of the main obstacles for FTBs is being able to borrow the amount needed to buy their home, First Time Buyer Boost will enable many FTBs to borrow more meaning we can help more people into homeownership.

"For new purchase applications from Thursday, August 29, the maximum Loan to Income is being increased to 5.5 times for many FTBs.”