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TSB pauses new build lending at 90% LTV and cuts multiples for self-employed

ended 12. December 2022

From today, the TSB has announced it is pausing new build lending at 90% LTV and has cut multiples for the self-employed. Also, it says the stress rate for background Buy to Let mortgages, on Residential mortgage applications, is increasing from 5.5% to 7.0%. Free PR platform, Newspage, sought the views of brokers.

8 responses from the Newspage community

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Editor
Justin Moy
Managing Director at EHF Mortgages
Mortgage lenders will inevitably look to reduce their new build lending to those with small deposits, given the expected property price trends for the next 12/18 months. More emphasis on lower Loan-to-value (LTV) remortgage business and product transfers will be easier for lenders to manage in the short term. This is disappointing for many first-time buyers, but with the higher rates already in place, many will have aborted their plans to move for the time being anyway.
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Editor
Craig Fish
Director at Lodestone Mortgages
It's a commonly held view that new builds are overpriced, and with property prices on a downward slide, this 'new home premium' is set to quickly disappear. Lenders are of course going to quickly distance themselves from this risky area and focus on more run-of-the-mill lending to protect their mortgage book and bottom line. This is a clear signal that, at this level, negative equity poses a real risk. As for the change to the self-employed income multiple, well this is a non-story as most lenders operate at this level anyway. Other lenders in the market can be approached who will assist, but it is a shame that the options available to those who are the cornerstone of British business are being limited.
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Jamie Lennox
Director at Dimora Mortgages
These changes are a clear signal to the industry that there are concerns about house prices dropping and the real risk of negative equity. With new builds typically costing a premium, there is a greater risk to the bank if they have to repossess the property that the "new property premium" is lost and results in it being worth less money on the resale market.
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Graham Cox
Director at Bridging Hub
The reduction in the maximum loan-to-income (LTI) multiple for self-employed applicants brings the TSB in line with the vast majority of lenders. Very few offer more than 4.5 times income, and then usually only to higher earners. So it's not hugely significant in the grand scheme of things. Nevertheless, this announcement shows how lenders are becoming more cautious.
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Austyn Johnson
Founder at Mortgages For Actors
Surprise surprise, the self-employed are being penalised again.
Wouldn't it be easier just to take some time to understand a person's situation better? Self-employed people are more of a secure bet as long as they are still trading successfully.
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Amit Patel
Adviser at Trinity Finance
Self-employed borrowers, it appears, have been dealt another hammer blow with this decision. They are the backbone of the economy and lenders need to do more to help them.
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Gary Boakes
Director at Verve Financial
With the majority of new build houses sold at a premium, it is not a surprise that lenders are taking precautions against what will inevitably be negative equity. Lenders are already pulling 2-year deals at 95% LTV, which just goes to show that lenders are worried about the expected pricing drops. The self- employed multiple cuts are just falling in-line with a lot of lenders, but it is not great news for the self-employed either way.
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Elliot Cotterell
Director at Windsor Hill Mortgages and Cotterell & Cotterell Commercial Finance
As a broker, this is a shame to see more restrictions put in place for clients but, at the same time, we must understand that we are in a recession with the cost of living increasing and house prices dropping - I can't say I'm overly surprised with these changes.