Skipton chief visits Downing Street amid calls for change to mortgage regulation
The chief executive of Skipton Group has joined a group of representatives from UK mutuals in a trip to Downing Street, as a number of UK building societies call for changes to mortgage regulations.
The visit comes as a number of building societies have called for an increase to the Financial Policy Committee’s loan-to-income (LTI) flow limit.
The rules of the limit currently state that only 15 per cent of new mortgage lending each quarter can exceed 4.5 times a borrower's income.
Skipton said it believes the current flow limit should be raised to 20 per cent, a move it said would deliver “meaningful societal benefits” by enabling more first-time buyers to access the housing market.
The group said the move could also help to "stimulate economic growth”.
Critics of the suggestion, however, have argued that lenders could struggle to pay back larger amounts.
The Downing Street visit comes after the CEOs of Yorkshire, Nationwide Building Society along with Skipton Group – some of the UK’s biggest building societies – jointly wrote to Dame Meg Hillier MP, Chair of the House of Commons Treasury Committee, to argue for raising the limit.
Charlotte Harrison, CEO of Homes at Skipton said: “Increasing the LTI flow limit would enable us to help more first-time buyers have a home, in turn boosting economic growth and supporting the Government’s housebuilding targets.
“Higher LTI lending is subject to the same robust affordability assessments and stress testing as standard lending.
“Our experience is that customers demonstrate the same if not higher levels of credit worthiness.”
Skipton has also argued that an increase in the LTI flow cap would also align with the Government’s commitment to double the size of the mutual and co-operative sector.
Alongside this policy position, Skipton Building Society has also announced a series of changes to its own lending criteria, designed to “improve affordability and better support aspiring homeowners”.
Coming into effect immediately, the changes include a reduced residential stress rate for shorter-term products, meaning a mortgage with a product term under five years will now benefit from a lower stress rate. The shift means that shorter terms will no longer negatively affect borrowing potential.
The firm said it “remains committed to responsible lending while ensuring its products are as accessible and supportive as possible for those striving to secure a home.”
Ms Harrison added: “At Skipton, we continue to recognise the growing affordability challenges facing first-time buyers.
“And as a result of the changes we’ve made, loan sizes could increase by up to £45,000 for a typical household earning £60k."