If a cap on LTVs and income multiples is implemented this will be a retrograde course of action and take mortgage lending back to the early 1960s. In those days building societies restricted lending to a maximum of 2.5 x income.
It was as a result of the inadequacy of this policy that first-time buyers were unable to borrow enough to gain a foothold on the property ladder.
Harold Wilson’s government introduced a scheme that gave applicants the ability to obtain a slightly higher mortgage, as the loan was exempt from being eligible for Income Tax relief.
Lending does need to have an affordability matrix for making sensible lending decisions, and one that takes into account other levels of borrowings including credit cards and personal loans.
If this type of criteria had been implemented over the last mortgage feast, many aspirants to home ownership would not now be facing the dread of having their homes repossessed.
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