Research by the Liberal Democrats has found that one in ten loans for mortgages are running at 4 X Salary as an income multiple compared to the nomally accepted rate of 3 X slary or 2.5% joint salary.
Our view
This is a worrying and a very dangerous trend. We understand that property prices are high and that people sometimes have to really stretch their incomes to be able to borrow the amount needed and get on the property ladder.
However, we fully expect interest rates to rise by a further 0.25% on Thursday and in fact, expect there to be around a further 1.0% to 1.25% in rises over the next 18 months.
Our advice, do not over committ! You may regret borrowing if interest rate increases burst the property bubble and we have a mini-crash.
Remember what some of our parents and grandparents had to do - they had to save for a few years before being able to buy a house. Perhaps tighter controls should be laid on lenders to prevent them lending too much?