Proposals to limit the amount of money a potential homeowner can borrow towards their new home to three and a half times their salary has been slammed by MyMortgageDirect.
Company Director, Catherine Hearnden has described the plans as “ridiculous” pointing out that they do not take into account individual household expenditure.
Is it fair to categorise a coupe with two children in the same way you would a couple with no children?
The proposal to limit mortgage lending to three and a half times of income was made by a study by the Institute for Public Policy Research (IPPR) after they found that the UK had one of the highest loan to value ratio’s on their mortgages, and believe this could be the reason for the economic turndown.
Hearnden added, “Affordability calculators are the way that you should asses the affordability on a mortgage, not a set limit of three and a half times [income] because some people can afford more.”
The Institute also advised that mortgage lending be limited to 90% of the house value, as they felt this would slow down the UKs “addiction to house price inflation.”
Whilst Hearnden admitted that idea made more sense, she wants to ensure that first time buyers still have the appropriate assistance to get their way onto the mortgage ladder.