The Times - Homebuyers hit by new clampdown on lending
Banks have lowered the amount they will lend based on people’s salaries so much over the past year that the average British worker hoping to put down a 10 per cent deposit on an average priced home would be more than £100,000 short, an investigation by Times Money can reveal.
Times Money asked all the major banks and building societies to submit their maximum income multiples. HSBC, Yorkshire Bank and Clydesdale Bank declined to disclose those figures, but of those that responded — Santander, Nationwide, Lloyds/Halifax, the Royal Bank of Scotland/Natwest, Woolwich/Barclays, the Chelsea Building Society and Skipton Building Society — income multiple caps varied between four and five times a person’s salary. The average of all the respondents was four and half times a borrower’s salary.
Aaron Strutt, of Trinity Financial, the broker, told The Times: “The Bank of England’s income multiple restriction has not helped things for many borrowers as, essentially, they need to save up longer and put down a bigger deposit. Many borrowers were already stretching themselves to secure a large enough mortgage in order to keep up with rising house prices and the caps have meant they can’t borrow as much.”
These low rates are the sting in the tail for borrowers who cannot secure a great enough mortgage against the backdrop of rising house prices, says Mr Strutt.
“Even borrowers taking Help to Buy mortgages often have the amount they can borrow restricted when compared to other customers. Until house prices come down buyers will need more generous income multiples, otherwise they will be forced to rent or rely on the Bank of Mum and Dad.”
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