Skipton Group has renewed its call for reform of the Bank of England’s mortgage lending rules, urging the Financial Policy Committee (FPC) to increase the current loan-to-income (LTI) flow limit from 15% to 20%.
The group’s chief executive, Stuart Haire, joined counterparts from Yorkshire Building Society and Nationwide in writing to Dame Meg Hillier MP, chair of the Treasury Select Committee, to press the case for a revision to the FPC’s cap on high LTI mortgage lending. The current rule restricts lenders to issuing no more than 15% of their mortgage books at over 4.5 times a borrower’s income.
Skipton argues that a modest uplift in the threshold to 20% would significantly expand access to the housing market for first-time buyers, many of whom are struggling to keep pace with rising house prices and tighter affordability constraints.
“A change to the flow limit would allow lenders to responsibly support more first-time buyers,” the group said in a statement, adding that the measure could play a role in helping the government meet its target of delivering 1.5 million new homes. It also pointed to alignment with the government’s stated ambition to double the size of the mutual and co-operative financial services sector.
The renewed lobbying comes as Skipton Building Society, part of the Skipton Group, announced a suite of changes to its own lending policy, aimed at improving affordability and widening access to larger loans. The updated criteria, which take effect from Monday 9 June, include a reduced stress rate for shorter-term mortgage products, a halving of the income threshold required to borrow at 5.5 times income, and a higher maximum LTI for borrowers with small deposits.
Customers earning more than £50,000 who are borrowing between 90.01% and 95% loan-to-value will now be eligible for a maximum LTI of 5, up from 4.75. Meanwhile, the minimum income required to access a 5.5x LTI has been lowered from £100,000 to £50,000.
Charlotte Harrison, chief executive of Homes at Skipton, said the changes were designed to address persistent affordability hurdles facing aspiring homeowners.
“At Skipton, we continue to recognise the growing affordability challenges facing first-time buyers,” she said. “Adjusting stress rates alone isn’t always enough, as many would-be buyers are still impacted by the limitations the Loan to Income (LTI) cap place on our lending. That’s why we’re taking a more comprehensive approach by revising both, while remaining within the current cap.”
Harrison said the latest changes could raise a typical household’s borrowing capacity by up to £45,000 – a 16% increase for those earning £60,000 annually.
She reiterated Skipton’s support for a review of the 15% flow limit, describing current affordability measures on high LTI lending as “robust” and emphasising that borrowers accessing higher income multiples tend to demonstrate equivalent or better credit performance.
