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Lenders clash over LTV cuts

Halifax has attacked Alliance & Leicester and NatWest for cutting their loan to value criteria in the South-east, claiming it will drive down house prices in expensive areas.

The two lenders have lowered the maximum LTV from 95 per cent to 90 per cent over fears that a downturn in the market could cause many borrowers to default.

But Halifax says A&L and NatWest are effectively dictating where borrowers can or cannot buy a property and are making it harder for first-time buyers to get on the ladder in costly areas such as London.

It fears the decisions could prompt other lenders to lower LTVs and force sellers to slash the price of their property so potential buyers can get a mortgage.

It plans to raise the issue with the CML despite the CML already indicating it will not intervene in a dispute about commercial decisions.

Halifax head of media relations Mark Hemingway says: “The real concern is that more lenders will follow suit, which will affect supply and demand. That has to be bad for borrowers. They are simply trying to transfer risk to their rivals.”

An A&L spokesman says: “There is no foundation to the suggestion that this could affect property values. We are just one lender among over 100 in a very competitive market.”

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Lives: Wandsworth, London.Born: May 28, 1955, London.Education: BA in politics philosophy and economics at Trinity College, Oxford. Went to school at Charterhouse in Surrey.Career: Began as a trainee chartered accountant at Ernst & Young in 1981. Joined Schroders as a research analyst for the investment division in 1983. In 1987, took charge of rebuilding Schroders&#39 […]

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