THE Government has announced that no new loans at or above four and a half times borrowers’ income can be included in the Help to Buy mortgage scheme, following the introduction of a Loan-to-Income (LTI) limit on mortgage lending by the Bank of England.
This follows the Chancellor of the Exchequer’s announce-ment last month that any mortgage lending limits introduced by the Bank of England would apply to all Help to Buy mortgage guarantee loans.
Set out in the Financial Policy Committee’s Financial Stability Report, mortgage lenders will be prevented from extending more than 15% of new mortgages LTIs at or greater than four and a half times the borrower’s income.
The new limits will apply to every single loan under the Help to Buy mortgage guarantee scheme.
The Chancellor of the Exchequer, George Osborne (pictured), said: “I fully support this action by the Bank of England’s new Financial Policy Committee to use the new powers we have given them. It will help protect the hard-won economic security by better insuring us against any risks that might emerge in our housing market.
“I want to protect those who own homes, protect those who aspire to own a home, and protect the millions who suffer when boom turns to bust. This announcement is a welcome sign that the new system we have created is working.”
The Chancellor has asked the Financial Policy Committee to review the Help to Buy mortgage guarantee scheme in September.