Under the current rules for the Retail Division of the Lloyds Banking Group you can have a maximum of nine buy-to-let (BTL) properties on their books worth a total maximum of £3 million. The Retail Division of Lloyds includes Bank Of Scotland, Birmingham Midshires, C&G, TMB, Halifax, Intelligent Finance, Lloyds TSB, Lloyds TSB Scotland and Scottish Widows.
As of the 25th of September (next Saturday) this is to be reduced down to a maximum of three properties worth a total maximum of £2 million, whichever limit is reached first.
Not only that, intermediaries (mortgage brokers) will also no longer have access to Cheltenham & Gloucester or LTSB Scotland brands for BTL deals. They will still though have access to some deals through Birmingham Midshires (BM Solutions).
The changes are to be effective as of close of business on Friday 24th September.
This should not be seen as just a minor update. This is a very significant move on the part of a group that has very large players on its books. Just consider which figure has the greatest impact, nine down to three properties, or total bank exposure down from £3 million to £2 million?
This is saying that Lloyds wants to reduce its exposure to the BTL market in the near future.
Should inflation remain stubbornly above the Bank of England's (BOE) target then the Monetary Policy Committee (MPC) may be forced to tickle rates up in response. This will force the banks' standard variable (SVR) rates up and with fewer ports to call at for re-mortgages the BTL landlords may well be looking to offload and realise gains (if any) or limit losses in a potentially falling market.
This could well be disastrous for what is left of the housing market. Especially if the other lenders emulate these policies. The only thing that will make the price of an average house fall significantly and that is if there are more forced sales. If interest rates rise than that is what we may well be facing.
One has to ask what is it that the Lloyds Group knows that we don't?