abbey ups mortgage limit by 5 times!

cattie1

abbey are going to increase the amount they lend for mortgages to up to 5x the buyers income to help first time buyers!
this most certainly will cause problems with people taking on mortgage higher than they can afford?!
[EMAIL="http://uk.news.yahoo.com/01112006/325/abbey-ups-mortgage-limit-five-times-salary.html"]http://uk.news.yahoo.com/01112006/325/abbey-ups-mortgage-limit-five-times-salary.html[/EMAIL]
sorry link didn't work so it is below.

cattie1

http://uk.news.yahoo.com/01112006/325/abbey-ups-mortgage-limit-five-times-salary.html

ZTD

The air must be seeping out of the housing bubble, so they need more [STRIKE]mugs[/STRIKE] marginal buyers to come in to puff it back up again.

Does anyone know if Abbey sell their mortgage portfolio onto anyone else?

adypem

I was watching one of those build/buy/restore programs on the TV last week, and the presenter asked the couple how much was their budget, to which they replied £240K which included equity in current house - fair enough.
He then said the figure they could really borrow was about £340K. Nearly 100K more than the budget, and he would advise stretching themselves as far as they could in order to get a nice property !!
I thought that was as stupid as it could get, but he then showed them a plot of land for £380K and then said you could get this if you borrowed £40K on a loan/family etc....

At that point I switched it off, and I'm waiting for the next edition of Repossession/Repossession/Repossession...

Rant over....

Storm

I can't believe the housing market at the moment, there are two camps to my view - the first believes house prices will keep on rising and rising, and the second that they're going to have to if not crash at least stabilise soon.

I'm very firmly in the 2nd camp, though I've friends who are getting their first mortgage, interest only, with no endowment etc on the basis that once the 2 years set rate is up there will be equity in the house - I'm VERY worried for them, but they're in the 1st camp and think I'm a pessimist!

bobbadog

My boy and I intend on getting a mortgage in two years time. We don't want to borrow more than 3 x what we earn, which is why we intend on moving out of London to do it. 5 x is a huge amount of money.... eeek. We'd never ever ever pay interest only, seems so risky, and I love the feeling of clearing debt. Lucky really

nearlyrich

It's OK borrowing 5 x salary but overstretching at whatever multiple is a risky business and some of the sad stories I read on here show that it all too common. Sadly the benefit system doesn't help to pay the mortgage and if a high earner loses their income through illness or redundancy there is often no safetynet.

climbgirl

They've quite clearly said it's not pitched at first time buyers, but 2nd or 3rd time buyers. They've said it'll only be given to people with a spotless credit rating, and income of £50K+, that they'll go through incomings and outgoings to make sure people have the ability to pay and that people will need at least a 25% deposit (about £50K for the average house price now). So I doubt many first-time buyers will be able to meet all those criteria...

Having said that, I don't think it helps the housing market much!

vivaladiva

I'd love a 5x salary mortgage! Sadly I realise there would be little chance of ever paying it back. I just feel sorry for those for whom it is the only way onto the property ladder.

oakdale_minx

I lived in Dublin for a year in the late 90's . The housing market went bonkers but the salaries didn't follow in the same direction and 5 x salary mortgages were being offered back then. All a bit crazy.

vivaladiva

Oops cross posted with climbgirl. Can't see too many first time buyer meeting those criteria either!