4 Times Income Maximum Mortgage

4 Times Income Maximum Mortgage.

Over the last few days, two of the big four banks have announced that they are to cap maximum lending for loans in excess of £500,000.

Last week Lloyds Bank confirmed it would make the move and this week Royal Bank of Scotland via its NatWest subsidiary confirmed it will do the same.

High earner lending is coming under increasing pressure to ensure suitability and affordability of mortgages. We are now all tested to see if we can afford to pay our mortgage not just in these good, low interest rate, house price rise times, but also to ensure we can afford in a recession, negative equity and significantly increased interest rates.

Comment

Pressure is being mounted on both lenders and government to control the UK property market. Even the European Commission has urged the UK government to try and control the spiralling house prices in the UK, particularly in London, with a suggestion that greater taxes should be levied on high value properties.

The issue in the UK is a difficult one to crack. We are an island and in the words of Mark Twain: “Buy land they are not making anymore”. The population of the UK looks set to increase by another 10million people in the next 15 years.

Demand for property outstrips supply, there is just not enough land, unlike huge geographical areas such as France, and not enough homes are being built.