Lloyds TSB stops home loans on UAE flats

CREDIT CRUNCH: Lloyds has axed home loans for apartments in the UAE and cut its loan to value ratio on villas to 50 percent. (Getty Images)

Lloyds TSB has stopped offering home loans to people wanting to buy apartments in the UAE due to the escalating liquidity crunch, the bank confirmed to Arabian Business on Monday.

The bank, Britain's third largest mortgage lender, said it had also dropped its loan to value ratio on villas in the UAE to 50 percent, meaning buyers can only borrow half the value of the property.

“Due to exceptional global market conditions, Lloyds TSB Middle East has altered some aspects of its mortgage product offering," the bank said in a statement.

"Lloyds TSB is not currently lending to customers who wish to purchase apartments.

"Lloyds TSB Middle East continues to offer home loans for purchasers of villas in the UAE. Customers can borrow up to 50 percent of the value of the property."

Lloyds TSB said at the beginning of October it was lending a maximum of 80 percent against villas and 70 percent against apartments in the UAE.

Jean-Luc Desbois, managing director of mortgage consultants Home Matters, described the move as "regrettable".

"Finding a deposit of 50 percent is going to rule out mortgaging with Lloyds TSB for most," Desbois said.

Banks and mortgage companies have been tightening their lending criteria over the last few months as regional and international money markets become increasingly paralysed due to the global liquidity squeeze.

Arabian Business reported last month banks and mortgage companies had cut their loan to value ratios by as much as 25 percent due to the liquidity squeeze.

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