New Plans To Restrict Mortgages Branded ‘Ridiculous’

 

The director of MyMortgageDirect, Catherine Hearnden, has commented on recent suggestions that restrictions need to be made on the maximum mortgage offered as “ridiculous”, which would see finance capped at just three and half times the total household income.

She made the remarks following the Institute for Public Policy Research’s proposals to limit mortgages to 90% of the property’s worth.

Ms Hearnden has been vocal in asserting that these proposals are not practical, with a high chance of the property market being affected negatively.  She went on to suggest that the 90% cap “should be a lender’s decision” rather than a set policy, as then there could still be other schemes implemented to aid those getting into the property market for the first time.

An expert observed that "The [maximum of] three and a half times household income is ridiculous because every household has different expenditure – one household might have five kids and one might not have any. Also, they might have other commitments and you don't know what sort of jobs they have."

Ms Hearnden gave the example that just one member of a family could generate £80,000 in household income, whilst in other cases there could possibly be two people generating £40,000 each, making the system possibly unreasonable.

The specialist went on to say that rather than setting a definite limit based on income, that the most successful way to assess the ability for a household to take out a mortgage should be based on affordability calculations.   ADNFCR-1286-ID-800574757-ADNFCR


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