Skipton Building Society is increasing its maximum loan size for first-time buyers from £300,000 to £500,000 to accommodate borrowers in areas with higher than average house prices like London and the South East.
Brokers are being informed of the change today in time for Monday when it takes effect. The building society’s maximum loan size for all other borrowers is currently £1m, or £500,000 for 90 per cent LTV mortgages.
Skipton will lend to a maximum of 90 per cent LTV at present. Until March last year the society lent to 95 per cent LTV but pulled out due to unexpected demand for the products. There are no immediate plans to reintroduce 95 per cent LTV products but a spokeswoman confirmed its position is constantly under review.
Out of the 32 London boroughs, all but four have an average house price that is lower than £500,000, based on the Land Registry’s March house price index.
Moreover, the average house price in the fifth most expensive borough, Islington, was £499,266 in March, meaning that a borrower looking for a 90 per cent deal would qualify for a mortgage with the society as long as the value of their home was no greater than the average for the borough.
The four boroughs with an average property price greater than £500,000 are Kensington and Chelsea, at £1.1m; the City of Westminster, at £769,763; Camden, at £652,417; and Hammersmith and Fulham, at £602,693.
Skipton senior products manager for mortgages William Gill says: “In view of average property prices, especially in London and the South East, we believe there is an opportunity to lend higher value loans to people looking to purchase their first home.
“Unlike their traditional image, many first time buyers are typically older, have families and have rented for a long period of time while saving their deposit and we want to help these people get onto the property ladder.”
Gill confirmed that the society is “keeping our options open” about whether it joins the mortgage indemnity element of Help to Buy when it launches in January and is waiting for the Chancellor to publish more details about the scheme.
London & Country associate director of communications David Hollingworth says: “This is likely to be helpful to borrowers wanting to buy in the South, or South East. It is good news and it shows a general shift in lender attitude and a widening out of the risk profile a bit, even if it is in a fairly gentle way.”