Lending Salary Multiples Too High

Lending Salary Multiples Too High

The FSA is still concerned about building societies taking on risky lending practices they do not fully understand.  Hector Sants, the chief executive of the FSA said the regulator has warned building societies for some time about excessive concentration in the buy-to-let market, the acquisition of mortgage books even when funding is stretched and the poor understanding of the extra risk of major exposure to commercial borrowers.

Our view

We believe the FSA test is on suitability and affordability.  If a member of the public has the means to support a higher than average mortgage because they have no loan debt or car finance or credit cards then why should a higher income multiple mortgage not be suitable.  We agree though that lenders need to keep a tight rein on their overall lending policy.

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