CONTINUING FINANCIAL volatility has prompted Permanent TSB to follow other lenders in the British market and tighten its lending to buy-to-let residential property investors.
Permanent TSB operates in the UK through its subsidiary, Capital Home Loans (CHL), and lends predominantly to the buy-to-let residential market. Some 21 per cent of the bank's loan book, or €8.2 million in loans, was to the UK residential mortgage market in 2007.
The bank informed brokers in an e-mail yesterday that from Monday it would be restricting mortgages on UK buy-to-let properties to a maximum of 80 per cent of the value of the property and suspending all applications for buy-to-let mortgages on houses and apartments built or converted over the last 12 months.
The bank said all outstanding documentation on buy-to-let and applications on new houses and apartments for mortgages greater than 80 per cent of the value of the property must be submitted by next Friday, while all loan offers on mortgages for new houses or apartments would be withdrawn after three months.
Permanent TSB is expected to announce rate changes on some of its Irish mortgage products today.
A spokesman for Permanent TSB said: "The changes we are making are a prudent response to a changing mortgage market in the UK. They were sign-posted some weeks when we announced a redundancy programme for some of our staff."
CHL said it was cutting 50 jobs, a fifth of its workforce, at the start of this month.
Meanwhile, Bank of Ireland has relaunched its range of mortgage products in the UK after temporarily suspending new mortgage business last week to clear a substantial backlog of new mortgage applications.
"They made significant inroads on clearing the backlog," said a spokeswoman for the bank.
She said the bank would be passing on last week's Bank of England 0.25 per cent rate cut to 5 per cent on its standard variable rate mortgages, but that it would be increasing rates by 0.5 per cent to 1 per cent on some of its other mortgage products in the UK.
She said the bank would continue to offer 100 per cent mortgages in the UK and that they would still require guarantees from the borrower's parents.
Bank of Ireland had loaned £25 billion (€31 billion) in mortgages in the UK at the end of its 2007 financial half year last September. Its UK mortgages accounted for about a third of its UK loan book. The remaining two-thirds were provided by Bristol & West, which was not affected by last week's product suspension.
The rising cost of bank funding, market turmoil and falling property prices have led to mortgage products being withdrawn across the UK mortgage market.
