Lloyds makes further restrictions to interest-only offering
Lloyds Banking Group is making a number of restrictions to its interest-only offering from tomorrow.
The changes will apply to all new interest-only, including part interest-only mortgage applications and further advances.
The bank will no longer accept cash savings, including Isas, as a repayment vehicle with further effects on stock and shares.
Stocks and shares will now be assessed at their current value and Lloyds group will lend at 80% of their value.
So if someone has £100,000 in shares Lloyds will be able to provide an £80,000 interest-only loan.
It will also require a minimum current value of £50,000 for this to be accepted.
Pensions must also have a minimum current value greater than £1m and up to 25 per cent of the current fund value can be used to support interest-only lending.
The policy changes do not apply to product transfers, transfers of mortgaged property and there is no change to the maximum LTV of 75 per cent on interest-only.
In a note sent to brokers the bank states: “We review interest-only criteria and risk controls on an ongoing basis. Following recent changes in the market for interest only mortgages, we have updated the policy for acceptable repayment vehicles. The updated criteria, which will apply from Thursday 16 February, will ensure that all interest-only borrowers are in a position to repay their loan in full at the end of the term, in line with our responsible approach to this type of lending.”