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Give credit to those who are willing and able to repay loans

Following the story that lenders have told the Bank of England they expect to make available higher LTV deals in the next three months (Mortgage Strategy Online), some readers have commented that consumers should save instead of pressuring banks to raise LTVs.

How can they save more? House prices are going to go up, meaning the deposits required will get further and further away.

If an applicant can prove their ability to pay where’s the harm in these deals? Paying rent will cost the same as a mortgage in most cases so if they can pay the rent they can pay the mortgage.

Would you expect a lender to say to a client – “You can clearly afford rent of £x per month which will be the same with a mortgage. But to be on the safe side we expect you to pay the mortgage and save 15% of your property value in the next 12 months”?

No you wouldn’t, so why expect a creditworthy rent payer to do this? We need to get away from LTVs and give credit to people who can and will pay.




Market fixing is an old and failed idea

The Financial Services Authority is to assume some responsibility for macroeconomic monitoring, although you might think this is a job for the Treasury or the Bank of England. But I suppose three inputs are better than one, and there’s probably a joint economic stability taskforce on the lookout for signs of the housing market overheating […]

Champion the small-scale developer

Traditional development finance must price in project and liquidity risk, but if your project is completed and you have begun selling units you could be eligible for cheaper funding, writes Matthew Tooth of Lendinvest. A product which prices purely for liquidity risk is one way to help developers lower their costs. This type of product allows […]


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