View more on these topics

Pundits slam high income multiple deals as deadly

Industry pundits have slammed high income multiples on variable and long-term fixed rates as “dangerous” and “deadly”.

Speaking at the Mortgage Business Expo in London, economist John Wriglesworth called for a ban on high income multiple variable rate 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. With variable rates the exposure to risk is unacceptable and should be banned.”

Jonathan Cornell, technical director at Hamptons Mortgages, has no problem with high income multiple products but he worries long-term fixed rates are too much of a commitment for younger buyers.

Cornell says that while early repayment charges are sky high the majority of people – in particular first-time-buyers – should steer clear of them.

He says: “My view is that you should not force people to take out long-term fixed rates. First-time buyers are hammered by early repayment charges. It is too much of a commitment.

“Long-term fixed rates with high income multiples can be deadly for young people.”

Wriglesworth adds that lenders are relaxing their lending criteria too far.

Frank Eve, managing director of Frank Eve Consulting, agrees: “The industry might have gone mad. Lenders are desperate to lend, first-time buyers are desperate to get on the property ladder and home owners are desperate to get out of debt. Affordability is being stretched to the limit.”

Recommended

Interbay launches new website

Commercial mortgage lender InterBay has launched a new website for intermediaries.  Amongst other things the site provides an online application form for self-cert commercial mortgages.   Interbay says the application is much stronger than a ‘DIP’, instead it gives a cast iron decision to lend within 48 hours which is underwritten, credit checked and only subject […]

FSA signs agreement with the CFTC

The Financial Services Authority has signed a Memorandum of Understanding with the United States’ Commodities and Futures Trading Commission to strengthen cooperation on the exchange of regulatory information.The MoU was signed by Reuben Jeffrey III, CFTC chairman, and Callum McCarthy, FSA Chairman, at the third IOSCO technical conference in London. McCarthy says: “This agreement builds […]

Buy-to-share deal could help first-time buyers

Stroud & Swindon has launched a buy-to-share product that allows home buyers to borrow more by taking into account income gained by renting out a spare room.This option is aimed at first-time buyers who are finding it hard to get on the property ladder but do not want to make a financial commitment by buying […]

Johnson Fleming is a finalist at UK Pensions Awards 2016

The UK Pensions Awards shine the light on excellence and recognise the advisers, providers and investment managers that offer the highest level of innovation, performance and service to occupational pension schemes and their members. This year’s awards looked at advisers and providers across 31 different categories and were rigorously judged by a panel of senior […]

Newsletter

News and expert analysis straight to your inbox

Sign up