Sunday, Nov 05, 2006

Banks lending unaffordable amounts

Yahoo/AFP: British banks stretch home loans amid red-hot property market

Potential home-buyers are being offered unprecedented loans to help secure a first property -- a nation where the average house price has soared almost 200 percent in a decade.
"To some people this is going to look like the answer to their prayers, because suddenly they are going to have the opportunity of borrowing the amount they feel they need to borrow," said Malcolm Hurlston, chairman of the Consumer Credit Counselling Service. "But it risks taking them into very dangerous territory, not least because interest rates are likely to be going up as well. hey are going to be very heavily stretched and if their salaries don't go up in the way they think they are going to do, they could find themselves dangerously overstretched," Hurlston added Sunday.

Nici Audham Gardiner, mortgage product executive at Abbey, which is owned by Spain's Banco Santander Central Hispano, said her bank's move was aimed at making it easier for first-time buyers to join the property ladder.The traditional limit for British lenders has been three and a half times salary.

Posted by little professor @ 09:57 PM (401 views)
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1 Comment

1. Nohpc said...

I have a feeling that some estate agents are going to go out of business following a rate rise. It will be interesting to see how the property market reacts to 5% . I think it will stagnate for months until interest rates are cut again.

Monday, November 6, 2006 08:06AM Report Comment
 

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