Mortgages

This week’s top stories: Halifax eases rules on bonuses and overtime and almost half of landlords plan to raise rents before Renters’ Rights Bill. Explore these developments and more:  MPC members explains May split decision The Bank of England’s Monetary Policy Committee rejected suggestions of ‘group think’ or factional voting patterns, despite apparent alignments among some members. Governor Andrew Bailey and members like Catherine Mann emphasised that differing views stemmed from individual interpretations of data. The recent 5-2-2 vote to cut interest rates highlighted this, with some pushing for a larger reduction due to weak consumption and global pressures, while others, like Mann, opted to hold rates citing persistent inflation risks and resilient labour market conditions. All agreed inflation was falling, though the timing for reaching the 2% target remains uncertain. Foundation launches BTL specials, Santander adds BTL remortgage range Foundation Home Loans has introduced new buy-to-let products for short-term lets, including a five-year fixed rate at 4.39% with an 8% fee for portfolio landlords and various F2 fixed options up to 75% LTV. Meanwhile, Santander has launched a new BTL remortgage range, cutting rates by up to 0.15% on selected LTV bands but withdrawing 70% LTV BTL remortgage products and increasing some lower LTV residential rates. Product transfer rates have also seen modest reductions, while Plus seven-year fixes and Clydesdale Bank rates are set to rise slightly. Halifax eases rules on bonuses and overtime Halifax has relaxed its lending criteria by easing how bonus income and NHS overtime are assessed, helping borrowers—particularly NHS staff—boost their affordability. Now, bonuses from previous employers can count towards the two-year average, and additional NHS overtime under the Waiting List Initiative and Additional Programme Activity schemes can be included. This marks a shift from the previous policy where past bonuses from different employers were excluded. Halifax also recently raised rates on several mortgage products. FCA to draw up AI guidelines for financial services firms The Financial Conduct Authority (FCA) and the Information Commissioner’s Office (ICO) will create a statutory code of practice to guide financial firms in responsibly developing and deploying AI and automated decision-making, aiming to balance innovation with privacy. In a joint statement, leaders from both bodies emphasised that regulation, rather than hindering innovation, can enable it by building public trust and giving firms confidence to invest. The move follows industry feedback requesting clearer guidance and greater engagement. Support initiatives like the FCA’s AI Lab, Digital Sandbox, and ICO’s Innovation Services will also be expanded and better promoted. Halifax lifts rates by up to 16bps, Market Financial Solutions reduces loans Halifax is set to increase selected fixed-rate residential loans by up to 16 basis points from tomorrow, affecting two-, three-, and five-year remortgage, product transfer, and further advance deals. Brokers must submit full applications by 8pm today to lock in current rates. Meanwhile, Market Financial Solutions has cut rates across its bridging loan range, with residential single bridging fixes starting from 0.70%, anticipating greater investor activity amid expectations of a base rate cut in 2025. Almost half of landlords plan to raise rents before Renters’ Rights Bill Nearly half (44%) of UK buy-to-let landlords plan to raise rents in response to the proposed Renters’ Rights Bill, according to a Landbay survey. Landlords with medium-sized portfolios are most likely to act, with properties in the South East and North West facing the biggest impact. Planned rent increases average 6%, or £74 per month—well above current inflation. The changes reflect landlord concerns over the bill’s restrictions, particularly the end of Section 21 evictions, prompting many to act pre-emptively to protect their income. Landbay warns these moves may worsen the cost-of-living pressures faced by renters. Virgin and Clydesdale latest lenders to ease stress tests Clydesdale Bank and Virgin Money have joined a growing list of lenders easing mortgage stress tests, enabling borrowers—particularly joint applicants earning £85,000—to access up to £40,000 more. The relaxed criteria apply to variable and fixed-rate deals under five years and reflect a wider industry shift after the FCA criticised lenders for being overly cautious, especially with first-time buyers. Similar moves from Barclays, Nationwide, and others signal increased flexibility, though constraints like the Bank of England’s loan-to-income cap remain. Experts suggest this could boost first-time buyer activity but may also fuel house price growth in tight markets. Court rules against OSB over ‘undue influence’ in joint mortgage The UK Supreme Court has ruled against One Savings Bank in a landmark case involving borrower Catherine Waller-Edwards, finding the lender failed to ensure she was not under undue influence from her ex-partner when remortgaging their home. The judgment broadens the application of the Etridge Protocol, which requires lenders to ensure independent legal advice is obtained in potentially coercive situations. Legal experts say this ruling now extends to joint loans where funds benefit only one party. Lenders—and possibly brokers—must now conduct stricter checks, raising questions over broader regulatory implications for the mortgage industry. Nationwide trims prices by up to 12bps, rates start from 3.90% Nationwide is cutting fixed mortgage rates by up to 0.12% on two-, three-, and five-year products for new buyers, home movers, and remortgage customers, with rates starting from 3.90%. Key reductions include a two-year fix at 60% LTV dropping to 3.90% for home movers and 3.92% for remortgages. This move follows Nationwide’s recent easing of affordability stress tests and contrasts with many lenders raising rates, offering some relief to borrowers. Sally Mitchell joins Versed Financial as consultant Versed Financial has appointed broadcaster Sally Mitchell as a mortgage and protection consultant. Known for her clear and accessible commentary on the mortgage market, Mitchell brings valuable experience to the firm. Versed’s co-founders praised her personalised approach, highlighting the appointment as a sign of their growing reputation. Mitchell expressed enthusiasm for helping clients navigate financial matters with tailored advice. The post Mortgage Strategy’s Top 10 Stories: 02 Jun to 06 Jun appeared first on Mortgage Strategy.

Chief executives from three UK lenders have written to the chair of the Treasury Select Committee to emphasise the need for the Bank of England to raise the loan to income (LTI) flow limit. The chief executives of Skipton Group, Yorkshire Building Society and Nationwide have jointly written to the BOE’s Financial Policy Committee chair Dame Meg Hillier MP in hopes of raising the LTI from it’s current rate of 15%, which limits how much more mortgage lending can be provided at more than 4.5x income. The banks believe that increasing the limit would allow lenders to responsibly support more first-time buyers, helping more people have a home. Skipton is looking for the limit to be raised to 20%. In the meantime, Skipton Building Society (part of Skipton Group) has made changes to its lending criteria, in effect from Monday 9 June. Key updates include: Reduced residential stress rate for shorter-term products – Customers taking a mortgage with a product term under five years will receive a lower stress rate, meaning shorter terms will no longer negatively affect borrowing potential. Lower income threshold for higher loan-to-income (LTI) – The minimum income required to access a 5.5x LTI has been halved from £100,000 to £50,000, opening up greater borrowing potential to a wider group of customers. Increased maximum LTI for higher LTV lending – For customers with a loan-to-value (LTV) between 90.01% and 95%, the maximum LTI has been increased from 4.75 to 5, provided the household income exceeds £50,000. Skipton chief executive of homes Charlotte Harrison says: “At Skipton, we continue to recognise the growing affordability challenges facing first-time buyers. “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. “And as a result of the changes we’ve made, loan sizes could increase by up to £45,000 (+16%) for a typical household earning £60k. “We continue to support calls for a review of the LTI flow limit. In the meantime, as part of our commitment to supporting more first time buyers, we’re making changes to the stress rate, lowering the income requirement to access larger loans, whilst increasing our LTI policy at 95% LTV.” The post Lenders write to FPC re loan to income cap as Skipton improves lending criteria appeared first on Mortgage Strategy.

LiveMore has lifted the loan-to-value ratios of its lifetime products by up to 1.75%.   The equity release lender says that, for example, for customers aged 80 the LTV has increased to 51% from 49.75%.  At age 70, it has increased to 41% LTV from 39.25% and at age 55, to 24% LTV from 22.25%.  The firm also lifts LTVs across all standard, five-year early repayment charge and six-month offer purchase lifetime products, however, these enhancements do not apply to its premier, property-plus or LTV1 tiers.  LiveMore sales director of equity release Les Pick says: “The LTV increases will provide new opportunities for customers seeking to unlock equity.”  The lender adds that the mortgage matcher on its website is free to brokers and works together with its affordability calculator to identify products that meet their clients’ circumstances. The post LiveMore raises lifetime LTVs by up to 1.75%   appeared first on Mortgage Strategy.

Labour’s plan to build 1.5 million new homes by 2030 is being “undermined” by a fall in planning consents, according to a report by Investec.   Just 241,000 housing units received planning permission in England last year, a 3% fall from 2023, reveals the study by the specialist bank. This shortfall is particularly acute in the South East, the study says, with London facing a substantial housing gap, with only 32,160 homes delivered in 2023, “less than half the estimated amount required”.  To hit its target – a 50% uplift on the previous five years — the government aims to build around 300,000 homes a year.  However, the report, called UK Housebuilding: Challenges and Opportunities, points to some signs of progress.   Housebuilding inflation costs slowed to 2% in 2024, compared with 15% in 2022 and 10% in 2023.   It adds: “Coupled with this, urban brownfield and prime central London land prices spiked in 2021 and 2022 before declining sharply in 2023, suggesting that land may become cheaper for builders.”  The report comes as the latest S&P Global UK Construction Purchasing Managers’ Index today showed that housebuilding was the weakest-performing segment in its construction survey, with a 45.1 mark in May. A level above 50.0 indicates growth.  Overall, the S&P building activity survey posted a 47.9 mark in May, up from 46.6 in April, showing an easing of a slowdown that has endured since the start of the year.  The government hopes that its relaxing of planning restrictions and green-lighting previously shelved housing projects will lead to greater building from the middle of this parliament. Chancellor Rachel Reeves’ spending review next Wednesday, is also expected to boost the housing department’s budget over the next five years. Investec building and construction equity analyst Aynsley Lammin says: “While we are currently not seeing the levels of construction needed to achieve the government’s targets, there are some positive signs in the market, with both land prices and cost inflation in construction beginning to normalise to pre-pandemic levels.  “As well as costs, the adoption of a partnership model—where local authorities and developers work together—may accelerate building levels.   Lammin adds: “These collaborations reduce development risks and capital requirements, allowing for a more flexible approach to delivering new homes.   “By leveraging co-investment from housing associations and institutional investors, we can create a capital-light growth model that helps unstick the housebuilding process.”  The post Housebuilding target ‘undermined’ by planning consent slide: Investec   appeared first on Mortgage Strategy.

The National Residential Landlords Association has claimed that government targets to improve the energy efficiency of rental homes are “unachievable”. The landlord group says that under proposed timelines private landlords might have less than two years to upgrade 2.5m homes. Proposals that are currently under consultation state that every privately rented home should have an energy rating of at least C wherever possible. Under the timelines set out, the new energy standards will be confirmed in late 2026, then applied to all new tenancies by 2028 and extended to all existing tenancies by 2030. It could leave landlords with less than two years to upgrade over 2.5 million private rented homes that currently have a rating below C. The NRLA says it supports the government’s objectives but the timelines are “simply unrealistic” due to a chronic and worsening shortage of skills tradespeople. Kingfisher group, the owner of Screwfix, B&Q and Tradepoint, says the shortfall in skilled trades is set to rise to 250,000 by 2030. The NRLA is instead calling for a slower, two stage implementation plan.  It proposes that by 2030, landlords should be required to meet standards related to the fabric of a building, such as installing insulation where possible and required. By 2036, all landlords should then meet further secondary standards related to the installation of smart meters and efficient heating systems. NRLA chief executive Ben Beadle says: “We want all private rented properties to be as energy efficient as possible.  “However, tenants are being sold a pup with timelines that are hopelessly unrealistic. “The idea that millions of homes can be retrofitted in less than two years is detached from all reality, not least given the chronic shortage of tradespeople the sector needs to get the work done. “Noble ambitions mean little without practical and realistic policy to match.” Buy-to-let lender Paragon recently expressed similar concerns. The post Govt energy efficiency plan ‘unachievable’, claims NRLA appeared first on Mortgage Strategy.

The law firm representing the borrower in yesterday’s appeal ruling against One Savings Bank has spoken out about the impact of the Supreme Court’s decision for victims of economic abuse. Solicitors Howard Kennedy, which represented Catherine Waller-Edwards in her successful appeal against the lender, says it is “landmark development” in protecting individuals who are vulnerable to “undue influence” in financial decisions. The crux of the case was whether or not OSB should have followed a specific procedure – known as the Etridge protocol – to ensure Waller-Edwards understood the full implications of remortgaging the property she owned with her then partner Nicholas Bishop. The protocol requires that lenders confirm a borrower has received independent legal advice if they are taking out a mortgage with another person that is for that person’s benefit. Waller-Edwards’ case was especially complex because the money raised from the remortgage was used for several different purposes and was therefore a “hybrid” loan. Part of the mortgage was to be used to repay Bishop’s sole debts, but part was meant to be for the couple’s joint benefit. Background to the case The situation leading up to the remortgage was also complicated. Waller-Edwards owned a £600,000 home with no mortgage and had £150,000 in savings as well as a £7,000-a-year pension before she entered into a relationship with Bishop in 2011. But she agreed to exchange the home and her savings for a property that Bishop was building, which already had a charge against it from another lender. The couple later took out a £384,000 remortgage from One Savings Bank against the new property, with Bishop stating this was to repay the first mortgage, clear £39,000 of debt and invest in another buy-to-let property together. In reality and without OSB’s knowledge, Bishop also used £142,000 from the mortgage to pay a divorce settlement to his ex-wife. After the remortgage was granted by OSB, the relationship between Bishop and Waller-Edwards broke down, he moved out and the mortgage on the home went into arrears. OSB launched possession proceedings in 2021, which Waller-Edwards appealed, but this was overturned and ultimately the case ended up at the Supreme Court for yesterday’s ruling. The key issues at stake in this case were the fact that the remortgage was a “hybrid” transaction, because the money was used for different purposes rather than all of the sum being used for the benefit of both parties. Although the bank did not know about the sum paid to Bishop’s ex-wife, which was for his benefit and not that of Waller-Edwards, the lender was aware of the £39,000 used to clear his debts. Because of this, Waller-Edwards’ legal team was able to successfully argue that she was effectively acting as a kind of guarantor on that element, making it what’s known as a “surety” transaction rather than a joint mortgage. The other aspect of the legal argument was whether the £39,000 element was a large enough sum to trigger the lender to need to follow the protocol and check the borrower was not acting under “undue influence”. Yesterday’s ruling clarifies that lenders should be following the protocol in any case where one borrower is assuming liability for the other borrower’s debts without any clear advantage to themselves. A landmark ruling for victims of economic abuse Howard Kennedy partner Joel Leigh, the lead solicitor for Waller-Edwards, says: “The Supreme Court’s decision is a landmark development in the law of undue influence, the most significant since Etridge. “It is remarkable that hybrid transactions have gone unrecognised for so long, and that a workable test has only now been confirmed. “While some lenders may have already adopted a cautious approach, the absence of formal recognition likely left many vulnerable individuals without recourse. “These were people who, dependent on a partner who abused their trust, were drawn into transactions that left them financially exposed. “Many will have lost homes, creditworthiness, and stability and lacked the means or confidence to challenge it. “Even those prepared to challenge such contracts would have faced an uphill battle, because without any legal recognition of hybrid transactions, claims were doomed to fail unless (as in Catherine’s case) taken to the highest court in the land. “The Supreme Court’s judgment delivers long-overdue clarity and a vital safeguard: from now on, in any non-commercial hybrid transaction, a more than de minimis [trivial] surety element is enough to put a lender on inquiry and require compliance with the Etridge protocol. “Catherine’s fight has not only secured justice for her but has reshaped the legal landscape, extending meaningful protection to both men and women at risk of economic abuse within their personal relationships.” The lender’s response OSB says: “We note the judgement of the Supreme Court. “We are naturally disappointed by the decision, which was based on a very particular set of facts. “This is a complex case arising from a loan in 2013 and we are assessing the implications of the ruling, although we note that cases involving undue influence are rare. “At the same time, we will review our current procedures.” The post Law firm hails ‘landmark’ win for victims of financial abuse appeared first on Mortgage Strategy.

The Bank of England is testing how artificial intelligence can help forecast inflation and improve its communications, according to rate-setter Megan Greene.   The Monetary Policy Committee member said the central bank was experimenting with several uses for the technology, including providing early warning signs of a financial crisis, analysing the labour market, and short-term predictions about the direction of consumer prices.  Greene said there were “massive” opportunities to use AI to help track the economy but added that central banks should use the technology judiciously.  The Brown University economist was speaking was speaking at a conference at King’s College, London.  Greene said the Bank has used “machine learning techniques” to help produce inflation forecasts.   She added that staff found these models are “more accurate at forecasting consumer price inflation at shorter time horizons so it can be useful there, particularly as cross checks to more traditional models.”  However, Greene was reserved about the effect AI might have on the wider economy.  She said: “There is an argument that AI should boost productivity growth and quite quickly.   “This could happen through income effects, so workers will earn more and will either work less and have more leisure time or will work the same and just consume more.”  “I have my doubts that we’ll see real productivity gains over my forecast horizon, which again is two to three years.”  Her comments come as the Office for National Statistics admitted today that inflation was overstated in April by 0.1%, due to an error in the vehicle excise duty data provided by the Department for Transport, which is used to calculate consumer price inflation.  The cost of living jumped to 3.5% in April from 2.6%, which was higher than expected.  The government’s data body does not plan to revise its inflation data, but will use the correctly weighted data from now on, meaning no further statistics will be affected.  Greene’s comments also come after the Bank said in November it had begun the biggest “root-and-branch” reforms to the way it makes and communicates rate-setting policy in almost 30 years.  These reforms follow a review last April by former US Federal Reserve chair Ben Bernanke review, commissioned after the Bank failed to predict inflation would hit a four-decade high of 11.1% in 2022, sparked by energy price rises and post-pandemic supply chain shocks.  The Bank has promised to change: Its data infrastructure and our modelling framework  The inputs into policymaking, including “the role of the forecast and scenarios, and their underlying assumptions”  The way MPC discussions are structured  How data is used to inform the MPC’s policy decisions  How the Bank communicates its “monetary policy decisions, outlook and risks to both financial markets and the general public”  The overhaul sparked by the Bernanke review is being overseen by Bank deputy governor Clare Lombardelli.  The post Bank of England tests AI to help with inflation forecasts   appeared first on Mortgage Strategy.

Clydesdale Bank will offer brokers direct access to its underwriting team for large loans over £500,000.  The high street lender says intermediaries now have the chance to speak to an underwriter before they submit a case “to confirm that we can help you and your client”. It says, in a broker’s note, that these calls may be able to resolve cases such as: Where non-standard income is required, such as investment income Self-employed applicants where there may have been one-off extraordinary costs When a higher than standard percentage of variable income is needed The bank’s underwriting team is available for calls between 9am and 5pm Monday to Friday, with brokers able to contact their business development managers for more information. Last week, Clydesdale Bank and Virgin Money became the latest lenders to ease their home loan stress rates, allowing customers to borrow around an extra £40,000.   The banks say the new rules apply to variable or fixed-rate residential mortgages for terms under five years. They explain that a typical example of joint borrowers with a combined income of £85,000, can expect to see their maximum borrowing rise to up to £40,000. The post Clydesdale Bank offers brokers access to large loan underwriting team   appeared first on Mortgage Strategy.

The Supreme Court has ruled against One Savings Bank in a case concerning a borrower who said she was subject to “undue influence” by her ex-partner when they took out a remortgage. The court decided that the lender should have followed a specific legal protocol to help ensure that the homeowner, Catherine Waller-Edwards, had not been put under “undue influence” when agreeing to the loan against the property. Legal experts say the ruling means that lenders, and potentially also brokers, will need to take extra steps to satisfy themselves that borrowers are not subject this type of pressure when entering into mortgage contracts. Previous court cases have already resulted in an agreed process that lenders must follow, known as the Etridge Protocol, to help protect borrowers. However, today’s ruling, Waller-Edwards (Appellant) v One Savings Bank Plc (Respondent), means lenders will need to follow this protocol in a wider range of circumstances. The background In this case, the borrower and appellant Catherine Waller-Edwards had previously been financially independent as she owned her £600,000 home mortgage-free, had substantial savings of £150,000 and a modest pension income. But, according to the judgment, in 2011, at a time when she was “emotionally vulnerable” she entered into a relationship with builder and property developer Nicholas Bishop. Bishop persuaded her to exchange her home and savings for a property he was building, which already had a loan charged against it. In 2013, the couple remortgaged the property for £384,000 with One Savings Bank. The lender understood the remortgage would be used to pay off the existing mortgage debt and purchase another property as a buy-to-let. In fact, the money was used to pay off his car finance, credit card and to make a divorce payment to his ex-wife as well as clearing the first mortgage on the property. Following this the relationship between Waller-Edwards and Bishop broke down with Bishop moving out and Waller-Edwards remaining at the property, which was now heavily mortgaged. On her pension income alone she was unable to keep up the repayments and the mortgage went into arrears. The lender began possession proceedings in November 2021. When appealing the repossession, Waller-Edwards argued that the Etridge protocol should have applied and that she was put under undue influence by Bishop when entering into the remortgage because it was partly used to pay off Bishop’s debt of £39,500. The judge agreed, but later the County Court, High Court and Court of Appeal found that One Savings Bank was not required to follow the protocol and carry out checks to ensure that Waller-Edwards was not put under undue influence because it was considered “joint borrowing” rather than a “surety transaction” where she was acting as a kind of guarantor. Today’s judgment reverses that finding. The implications for lenders Herbert Smith Freehills Kramer senior associate Frances Edwards says: “The ‘Etridge protocol’, which has been in place since the early 2000s, seeks to protect vulnerable parties who might be forced to provide security for a loan under undue influence from the other party to the loan. “It requires banks to communicate directly with the party to ask them to obtain independent legal advice about the loan and to obtain confirmation from a solicitor acting for that party that the solicitor has fully explained the nature of the transaction and its practical implications. “In a judgment handed down on 4 June 2025, the UK Supreme Court widened the requirement on banks to follow the protocol where sums are being advanced to two non-commercial parties jointly but the funds are to be used partly for one party’s own purposes. “Practically, this requires banks to send out their usual Etridge protocol letter in these additional circumstances, which many may well have been doing following the Court of Appeal’s judgment in the case. “The judgment provides clarity as to what is required, simplifying the complex ‘fact and degree’ test suggested by the Court of Appeal.” Questions over impact on brokers Blackfords financial crime partner Jennifer Richardson says the ruling significantly increases the liability on lenders to undertake checks in respect of borrowers. But she says: “The decision also raises a lot of questions about how this will be applied in the case of mortgage brokers for example. “Will this liability extend to them as well? Should this lead to a more stringent regulatory regime? “Solicitors are often expected to identify similar situations when dealing with clients, and face regulatory investigations if they fail to do so. “It may be that we see a similar tightening of regulation amongst lenders as a result of this case.” The post Court rules against OSB over ‘undue influence’ in joint mortgage appeared first on Mortgage Strategy.

The Financial Ombudsman Service has opened a consultation on lowering the payouts it directs firms to hand over to consumers.     The study will look at cutting the interest rate applied to compensation handed down against firms who have lost cases to customers.  A typical form of interest FoS uses directs firms to pay to compensate consumers who have been ‘deprived’ of money – that is, not having it available to use – such as where an insurance claim has been wrongly turned down. In these cases, the ombudsman can currently direct the business to pay 8% interest on top of the compensation for the period their customer was out of pocket.   It can also tell a business to pay 8% interest if it doesn’t pay compensation on time.     However, following an earlier Call for Input carried out with the Financial Conduct Authority, FoS now proposes changes to its interest charges.  FoS now recommends charging an interest rate that tracks the Bank of England’s base rate plus-1%.  It says: “The base rate would be calculated as an average rate over the period that the money was due until the date redress payment is made.”  The body’s consultation document also details “a number of other interest rate options and proposals” that are open for comments until 2 July. Financial Ombudsman Service interim chief ombudsman James Dipple-Johnstone says: “We think that reform of the dispute resolution system is crucial to make it fit for the future.   That is why we are acting on feedback from our Call for Input and reviewing a range of our processes to ensure that they work for a modern economy.   “We welcome feedback from stakeholders on whether our proposed new interest rate strikes the right balance between simplicity, fairness and proportionality.”  Economic Secretary to the Treasury Emma Reynolds is currently carrying out a review of FOS to see if it remains “a simple, impartial dispute resolution service”.  Her study will include looking at the body’s compensation structure and whether it acts “as a quasi-regulator”.  In February, the Financial Ombudsman Service chief executive and chief ombudsman Abby Thomas stepped down unexpectedly without notice after joining the body in October 2022.   The post FoS to consult on lowering consumer payouts   appeared first on Mortgage Strategy.