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Abbey warned to be wise when lending 5X income mortgages

John Postlethwaite, consultant at Punter Southall financial management, has warned Abbey that its new scheme, however helpful, must be regulated strictly to avoid pushing the market beyond its limits.

He says: “The Abbey’s decision to lend people up to five their salaries must be used wisely and in itself can be used as a tool to help people move or get on to the property ladder, when otherwise they would not be able to.

“But borrowers should be wary of borrowing so much against their incomes. What happens if their circumstances change and income drops, or if interest rates rise? The borrowers who have borrowed large sums in relation to their salaries will be the hardest hit. With the uncertainty in interest rates at the moment and a widely predicted rise I would question the decision and would hope the Abbey will indeed use it wisely and not just a way to lend more money.

“On a wider basis, as property is continuing to rise, it puts more property within reach if you can borrow more. Therefore with more people being in a position to pay the inflated prices there is a danger that this will increase demand. As we all know an increase in demand will lead to a further increase in price, perhaps pushing the market beyond its normal limit.”


Keep client records handy

The Association of Mortgage Intermediaries is warning brokers to keep client documentation in a safe place in case the police want to access it in the course of criminal investigations. Rob Griffiths, associate director of AMI, says several brokers have called its help-desk for advice when they have been involved in police investigations. He says: […]

Lenders can help portfolio landlords

The record level of buy-to-let borrowing in the first half of 2006 once again shows the growing value of this area of mortgage lending. The Council of Mortgage Lenders says that in the first half of 2006 there were 767,000 outstanding buy-to-let mortgages worth £83.9bn, accounting for 8% of the value of lending compared with 7% in the first half of 2005.

UCB unveils self-cert offer

UCB Home Loans has launched a limited offer on a self-cert three-year tracker product with a rate of 5.09%. The deal tracks the Bank of England base rate plus 0.34% for three years. It boasts a free standard valuation for purchase and remortgage applications.

Complete links up with GMAC-RFC

Complete Mortgage and Loan Services has become the latest GMAC-RFC packager partner to offer the lender’s point-of-sale offer facility to its brokers. Having successfully completed its pilot exercise on POS+, Complete achieved 17 POS-O on its first “live” day, which represents the highest number produced on a GMAC-RFC Partners’ opening day of using POS+.Tristan Pile, […]

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Guide: Johnson Fleming’s managed auto-enrolment service for SMEs

Johnson Fleming has launched its new managed auto-enrolment service, designed to support SME businesses of up to 250 employees. The managed auto-enrolment service is not just about providing businesses with a software system for them to manage themselves, but more about outsourcing the administration of the project and scheme to Johnson Fleming’s auto-enrolment staff.


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