Lloyds is set to slash the maximum loan size for all shared ownership and shared equity products – including Help to Buy equity loans – to £150,000.
Previously, all Lloyds brand offering Help to Buy – Halifax and Lloyds Bank – would accept applications for loans up to £500,000 for such products but from tomorrow the maximum loan size for these products will be cut to just £150,000 temporarily.
A spokeswoman for Lloyds says: “We have taken the decision to temporarily cap shared equity and shared ownership lending to £150,000. This is a prudent, short term change that reflects the fact that we currently hold around a 50 per cent share of this market and is a further step to focus our activity on supporting first-time buyers who have limited options to get onto the ladder.
“We remain committed to supporting the affordable housing sector and new build market, recently extending our Help to Buy mortgage guarantee scheme to allow applications for those with a 5 per cent deposit on new build properties.”
London & Country associate director of communications David Hollingworth says the move “changes the face of Help to Buy 1”.
Hollingworth says: “You can argue that a maximum loan of £150,000 will still cover a big proportion of Help to Buy 1 transactions, based on the data we’ve seen reported.
“But this does change the whole face of what Help to Buy 1 set out to do. Next-time buyers have already been excluded so it’s higher end buyers that will be particularly affected by the reduction.””
The lender will also raised all shared equity/shared ownership products up to 80 per cent LTV by 0.3 per cent.
The changes come into effect from 1 August.