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Banks change mortgage rules to target the wealthy

·2-min read
house sold money mortgage wealth
house sold money mortgage wealth

Britain’s biggest banks are targeting wealthy mortgage borrowers amid an affordability crunch brought on by soaring inflation.

Halifax has today increased its minimum loan size from £25,000 to £100,000 on some of its two and five-year remortgage deals. Experts said many lenders were vying for the richest homeowners as the cost of living crisis leaves less affluent households struggling to pay their bills.

It follows NatWest which yesterday relaxed its lending limits for wealthier borrowers. It will now offer those who earn more than £75,000 per year a mortgage of up to five-and-a-half times their annual income. The new rules apply to mortgages sold using a broker and joint applicants must have a combined income of at least £100,000 a year.

NatWest also increased its maximum loan size for wealthy borrowers, those with a 40pc deposit can now borrow an unlimited amount. A £10m lending cap previously applied.

Customers with a 20pc or 15pc deposit can borrow up to £2.55m, an increase of £1.55m, and those with a 10pc deposit can borrow £200,000 more, up to £750,000.

Experts said banks were turning their attention to richer homeowners who are likely to weather financial turmoil better than poorer clients. Customers with large deposits and high incomes are typically deemed less risky by lenders.

Meanwhile lower earners and those with smaller deposits have been hit by huge increases in utility bills and higher outgoings, meaning they are less likely to afford rising interest rates.

Jamie Lennox, of broker Dimora Mortgages, said: “Halifax are going to be focusing on larger borrowing moving forward, which is going to be a more profitable area for them.

“Nevertheless, there are going to be a lot of customers around the country who will no longer be able to access one of the biggest lenders for their remortgages.”

A spokesman for Halifax said the higher minimum loan size applied to some deals sold through mortgage brokers and the change would affect a small amount of its overall mortgage lending. The lender said the changes were part of a “regular review” of its range.

Earlier this month Nationwide building society increased its maximum loan size from £2m to £5m. Experts said this was also to target weather borrowers.