Abbey for Intermediaries has relaxed its interest-only criteria by allowing customers to borrow part interest-only part repayment up to 75 per cent loan-to-value.
Since February, borrowers wanting an interest-only loan could only borrow up to 50 per cent LTV.
While Abbey insists the interest-only element must still be no more than 50 per cent of the property’s value, customers can borrow the remainder up to 75 per cent on a capital and interest basis.
The lender is also reducing the minimum property value for buy-to-let applications from £100,000 to £75,000.
Abbey managing director Miguel Sard says: “We are committed to supporting the housing market and borrowers in today’s market conditions. Ourmaximum LTV for residential interest-only borrowing remains unchanged at 50 per cent LTV but by now allowing ‘part and part’ applications up to 75 per cent LTV where the remainder of the borrowing is on a capital and interest basis, we can offer new and existing interest-only borrowers greater flexibility, whether they are moving home or remortgaging to us from another lender.
Abbey started a wave of interest-only criteria tightening among lenders when it cut its maximum LTV for interest-only mortgages from 75 per cent to 50 per cent in February.
Between February and May, ING Direct, Leeds Building Society and Coventry Building Society all cut their maximum LTVs from 75 per cent to 50 per cent, while Skipton Building Society cut its maximum LTV from 75 per cent to 60 per cent and The Co-operative Bank pulled out of this type of lending altogethe.
Chadney Bulgin mortgages partner Jonathan Clark says: “This is great news from the Abbey and confirms their commitment to step up their intermediary lending as rates alone were never going to allow this.”