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FSA: High income multiple mortgages lower risk than low income multiple mortgages
HAMISH_MCTAVISH
Posts: 28,592 Forumite
The FSA has helpfully published a list of default rates by loan to income ratio for mortgages.
Does sort of put things into perspective.....
<2.5 = 1.56%
2.5 = 1.35%
3.5 = 1.18%
4.0 = 1.22%
4.5 = 0.88%
5.0+ = 1.43%
All LTI values total = 1.21%
The lowest default rate is for those borrowing an income multiple of between 4.5 and 5.0 times income.
The highest default rate is for those borrowing an income multiple of less than 2.5 times income.
Very interesting, and totally undermines one of the main arguments to restrict lending to 3.5 times income.
Does sort of put things into perspective.....
<2.5 = 1.56%
2.5 = 1.35%
3.5 = 1.18%
4.0 = 1.22%
4.5 = 0.88%
5.0+ = 1.43%
All LTI values total = 1.21%
The lowest default rate is for those borrowing an income multiple of between 4.5 and 5.0 times income.
The highest default rate is for those borrowing an income multiple of less than 2.5 times income.
Very interesting, and totally undermines one of the main arguments to restrict lending to 3.5 times income.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
0
Comments
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Mortgages are based on affordability now. 4-4.5x joint is the norm now with a few lenders going as high as 5.
Affordability is a much better way of working out suitability.0 -
Mortgages are based on affordability now. 4-4.5x joint is the norm now with a few lenders going as high as 5.
Affordability is a much better way of working out suitability.
Actual average mortgage lending is consistently around an average of 3.2x.
This is consistent, as lenders maintain their new mortgage business at a given rate.0 -
Thrugelmir wrote: »Actual average mortgage lending is consistently around an average of 3.2x.
This is consistent, as lenders maintain their new mortgage business at a given rate.
Yeah meant to say that lenders will lend up to between 4-5 as norm now0 -
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Thrugelmir wrote: »This is counterbalanced by lending at far lower multiples.
Any comment on why the lowest multiple lending is the riskiest?
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
I can smell Hamish's desperation.0
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The last of a dying breed. Seems if most have conceded that the boom days are over.0
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Thrugelmir wrote: »The last of a dying breed. Seems if most have conceded that the boom days are over.
So you can't explain why the lowest multiple lending is the riskiest. “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Hamish, stop cherry picking data.
Theres so much stuff in there, that completely undermines so many of your arguments. Especially the interest only mortgage section, where they conclude that interest only mortgages were taken mainly on affordability grounds. Bet you detested that section.
The key with these threads is what you haven't highlighted and started a thread on. And theres a lot of it.0 -
I can smell Hamish's desperation.
Excellent.
Another one to add to the "desperation index".
Cheers.:beer:“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0
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