Economist John Wriglesworth has called for a ban on high income multiple variable rate products.
Speaking at today’s Mortgage Business Expo in London, he says that while he welcomes fixed rate high income multiple products he warns that variable rate options pose a “dangerous” and “unacceptable” risk to consumers.
Wriglesworth says: “Variable rates with high income multiples are dangerous. What worries me about variable rates is that you can not insure yourself against interest rates going up and doubling repayments can be hurtful.”
Lenders are relaxing their lending criteria and you might say it is going too far. With fixed rates high income mulitples is fine.
He adds: “With variable rates the exposure to risk is unacceptable and should be banned.”