The Royal Bank of Scotland (RBS) have introduced tighter restrictions on mortgage lending in an effort to make sure customers can afford their loans.
Well that’s the official line anyway, although personally I think there may be hidden agenda…. RBS, which owns NatWest, will restrict customers to borrowing four times their income on loans of £500,000 or more.
At Mortgage Required, most of our business is done in Berkshire and Surrey, two of the most expensive counties to buy property in the UK, yet the average mortgage we arrange is about £190,000. That’s a long way short of the £500,000 threshold.
Only about 2.5% of borrowers have mortgages over this amount and the majority of these loans are for property in London. Last year prices in the capital rose by 17%, so restricting how much you can borrow to 4x your salary may address inflationary pressure in London.
The Lloyds Banking Group who include Halifax, Birmingham Midshires and one or two other smaller brands announced similar measures last month.
I suppose this all makes sense in the world of mortgages, but few attempts to influence house prices in the past have worked. It’s all about supply and demand and in most desirable areas, demand is high and supply very limited.
That’s said, although the high street lenders are making these moves, there are still plenty of private banks happy to get involved in higher lending with “high net worth” clients by offering “individual underwriting” for special cases. These banks often persuade clients to move their banking and / or investments to the new bank in exchange for special underwriting on the mortgage.
I can’t help but think that RBS and Lloyds will simply start to miss out on this lucrative sector of the market and other smaller banks will pick up the slack.
One thing I can’ get my head round is this: Were I earning £500,000 per annum, would I be happy with a mortgage of just 4x my salary at £2,000,000 m? Or would I want to stretch myself further? At what point would the level of my mortgage keep me awake at night? Thankfully not a problem for me right now. Night night!
For more information, speak to a mortgage adviser on 01628 507477 or contact us.
Recent posts
A recent study by Boon Brokers where 1,000 people who had used an estate agent over the last year were surveyed, showed that a whopping 52% said they were pressured into using the estate agents’ in-house mortgage broker.
When will mortgage rates fall further?
7 days ago
Analysts are predicting further rate cuts this year, with the next one possibly coming down to 4% when the Bank of England’s Monetary Policy Committee meet on Thursday 7th August 2025.
The Financial Conduct Authority (FCA) has shared new changes to mortgage rules with the aim to simplify remortgaging, and encourage competition within the mortgage market.
Lloyds boost lending for first-time buyers
14 days ago
Lloyds Banking Group has jumped on the bandwagon to boost lending for first-time buyers as they allocate an additional £4 billion to help first-time buyers on to the property ladder.
As the Loan to Income (LTI) cap has been increased to 5.5 times income, applicants who fit the First Time Buyer Boost criteria could borrow up to 22% more.
The government is introducing mortgage reforms to boost homeownership, stimulate economic growth, and make the housing market more accessible, especially for first-time buyers.
Chancellor Rachel Reeves has announced the most significant mortgage reforms in over a decade—great news for those dreaming of homeownership.
Nationwide ease criteria for first-time buyers
17 days ago
Nationwide ease their ‘Helping Hand’ mortgage designed to help first-time buyers get onto the property ladder by allowing them to borrow up to six times their income.
Ways to save money over the summer holiday
23 days ago
Keeping the kids entertained over the six-week summer holidays isn’t always easy, especially with the cost-of-living making it even more difficult. Below is a list of fun, inexpensive ideas to do over the break
The Financial Conduct Authority (FCA) has published a discussion paper about the future of the mortgage market in a bid to improve access for first -time buyers, self-employed, and those borrowing in retirement.
More information
Trusted by
