While the consumer press went into overdrive about this announcement I’m sure most brokers didn’t bat an eyelid.
The reason Abbey created such a noise is that it is seen as the first mainstream lender to state in black and white that it will go up to 5 x income. But brokers know it’s not the only one.
Other big names such as Alliance & Leicester, Royal Bank of Scotland, Cheltenham & Gloucester and the Yorkshire have been doing this for years.
More specialised intermediary-only lenders are flexible in what they will offer and can look at borrowers’ individual circumstances.
And the truth is that Abbey’s move will do nothing to help first-time buyers. A look at the small print shows that to get 5 x income a borrower must already have a mortgage, have a perfect credit record and earn £60,000.
I feel sorry for the wannabe first-time buyers who will have read the headlines and rushed to their nearest Abbey branch only to leave deflated.
I remember how disheartened I felt when I went to a big London-based broker that shall remain nameless, to be told there was nothing it could do for me unless I came back with a deposit of at least 5%. Since I don’t have a rich mummy and daddy there was precious little chance of that happening.
Luckily I found a decent IFA who used his skill and experience to find a lender suitable for me and I managed to buy my one-bedroom flat.
A good broker is invaluable. While big lenders can grab column inches by doing very little, a broker who knows the market can do their bit to help first-time buyers.
But while buyers are struggling, lenders are making it easier for buy-to-let landlords.
In the past few weeks several lenders have cut their rental cover requirement to 100% from the previous average of 125%. This, in theory, means a landlord needs no surplus income from his rental compared with the mortgage. So more landlords will be able to go on snapping up the properties that first-time buyers could afford.
This is unfair, and the situation is unlikely to be eased by the growing pressure on the Monetary Policy Committee to keep raising the base rate.