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Income multiples are totally inappropriate nowadays

From Keith Butler

I was stunned to read in Mortgage Strategy (September 12)somebody as respected in the industry as John Wriglesworth suggesting income multiples could be raised to 6 x income.

Speaking as somebody who has been in the mortgage industry for nearly 30 years it seems ludicrous that here we are in the 21st century and there are still some lenders relying on something as primitive as income multiples.

Does it make sense to anyone that a lender would lend the same amount to, say, a single man living in Aberdeen as they would to a married man with five children living in central London simply because they are earning the same amount?

This seems like nonsense to me and has done for many years.

A much more realistic assessment of customers’ income and expenditure is needed. I wouldn’t disagree that if affordability were to be properly assessed and then calculated back into crude income multiples there would be occasions where 6 x income would be found to be prudent. But equally there would be occasions where it would be inappropriate.

I believe Wriglesworth made the comments while he was in Spain. Perhaps he had been too long in the sun. Hopefully now he’s back in Blighty he’ll see that income multiples are totally inappropriate.


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