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Newcastle BS cuts interest-only max LTV to 50%

Newcastle Building Society has reduced its maximum loan-to-value for interest-only lending from 75 per cent to 50 per cent.

If interest-only is selected, borrowers cannot pass the 50 per cent LTV cap even if the remainder of the loan is on a capital repayment basis.

The building society says it took the decision as a result of similar moves made by other lenders.

In a note to intermediaries, the society says: “As you will be aware, there has recently been a general downward movement in the marketplace in the level of interest only borrowing allowed by lenders and our move is a reflection of this.

“We believe that being able to access an interest only mortgage at a reasonable level is appropriate for borrowers in certain circumstances and it is our intention to review our position on an ongoing basis.”

Earlier this month, Money Marketing revealed ING Direct had cut its maximum loan-to-value on interest-only lending from 75 per cent to 50 per cent and Principality Building Society restricted its interest-only lending to three products but kept its maximum LTV at 85 per cent.

In March, Money Marketing revealed Leeds Building Society cut its maximum LTV from 75 per cent to 50 per cent and Skipton Building Society cut its maximum LTV from 75 per cent to 60 per cent. In the same month, Nationwide Building Society and Coventry Building Society cut their maximum interest-only LTV to 50 per cent from 75 per cent.

Money Marketing also revealed in March, that Santander had further tightened its interest-only criteria by announcing it would no longer accept pensions, the sale of a second property and cash savings as repayment vehicles. In February, it cut its maximum LTV from 75 per cent to 50 per cent.

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