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Leeds is latest to slash interest-only LTV to 50%

Leeds Building Society is the latest lender to restrict its interest-only products, cutting its maximum loan-to-value ratio from 75 per cent to 50 per cent.

The change, as revealed by Moneymarketing.co.uk, came into effect last week.

In February, the building society cut its maximum LTV for interest-only loans from 70 per cent to 50 per cent where the repayment strategy is the sale of the property.

The latest change affects all owner-occupier borrowers, regardless of the repayment vehicle they have in place, but it does not affect the lender’s buy-to-let range.

Last week, Moneymarketing.co.uk also revealed Skipton Building Society has cut its maximum LTV for interest-only lending from 75 per cent to 60 per cent.

Last month, Santander further tightened its interest-only criteria and is no longer accepting pensions, the sale of a second property, bonuses or cash savings as repayment vehicles.

The move came nearly two months after Santander cut the maximum LTV on its interest-only lending from 75 per cent to 50 per cent.

Both Nationwide and Coventry building societies cut their maximum LTV for interest-only lending from 75 per cent to 50 per cent last month.

Chadney Bulgin mortgage partner Jonathan Clark says: “Most people are not going to be able to satisfy the new criteria of a lot of lenders and this could mean they end up as mortgage prisoners.”

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