Nationwide have said that deposits and income multiple limits are a bigger problem than debt servicing costs. Their report has shown that less than 10% of 22-29 year olds can overcome lending income multiple limits. Mortgage costs for a first time buyer now account for around 42% of take home pay compared with only 18% in 1996. According to figures from the Office of National Statistics, the average earnings in the UK are around £27,500, which, at the current level of three times income multiples, would support a mortgage loan of £82,500.
Our view
We agree - the availability of high lending is a danger. If interest rates did take a 'turn for the worse', this country would fall into turmoil with repossession crippling the nation. You have been warned! Need a mortgage? Let us do a search for you.