I’m rarely misinformed about products

Oh dear, I appear to have upset Abbey - well, specifically Ricky Okey, managing director of Abbey for Intermediaries (see Letters).

If, after 18 months of writing this column in Mortgage Strategy, Abbey is upset, I’m sorry. Had there not been other issues kicking around during this period I’m sure I’d have got round to doing this much sooner.

Come on Ricky, you mustn’t be so precious – the views expressed here are only my opinion after all. You are probably inundated with commentators roundly applauding you for allowing borrowers to hock themselves to 5 x their joint income – it’s just that I’m not one of them.

And by the way, as an act of reconciliation, might I counsel you against using the “…and if he’d researched his subject properly…” line of attack? In public relations terms this is generally acknowledged to be a pretty bankrupt riposte. It carries the subtext: “Damn, he’s right. I need to respond but I can’t think of anything else to say.”

The truth is, when you’re in a hole you should lay the shovel down, not keep digging.

You’re better off ignoring an issue completely or casting doubt on the commentator’s credibility. In my case, I’m pretty sure you would get far more support for this approach than by inferring that I don’t understand the products or the policy involved. After nearly 40 years in the industry I may occasionally be misguided but I’m rarely misinformed.

And anyway, I’m a convert to the concept of affordability, as my column has stated. But I don’t think Abbey’s approach is a sensible way to promote it.

Whatever checks and balances Abbey has put in place with this deal I don’t believe it will ever be sufficient to prevent some borrowers being seriously damaged by incurring mortgage debt at this level.

By incorporating such exceptional largesse into its mainstream criteria Abbey has created a new norm. It is my belief that this move will encourage customers and some brokers – not to mention Abbey staff – to expect and apply for this level of borrowing. Not all approvals will be affordable.

Of course, some will be. I know that my first property was purchased with a 6 x income multiple and I never missed a payment. But the world has moved on and so have levels of indebtedness.

I have no particular axe to grind when it comes to Abbey – otherwise over the months this column would have been ringing with the sound of its customer and service delivery issues. In fact, I worked for Abbey National for 14 years – the happiest of my career. I just think that incorporating 5 x joint income into policy is nuts. That doesn’t make me a bad person.