Lloyds caps affordability to 4x income to rein in raging market risk


Lloyds, the UK's biggest lender, has put an immediate cap on income multiples on mortgages over £500,000 to primarily target the London market in a bid to combat the capital's swiftly rising property price inflation.

In London, where house prices have risen by over a quarter in the past year, Bank of England figures suggest income ratios above 4.5% have risen from 12% in 2007 to 17% now. Estate agent Haart figures out today show average London property prices reached £501,056, up 26.1% annually and 4.3% month on month. This is annual growth of £103,761 fuelled by a massive in-balance of supply and demand. The UK's biggest mortgage lender has moved to stop borrowers over-reaching themselves in London ahead of any upward movement in interest rates from 0.5%. The group expects this policy change to i...

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