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.