The UK Housing Boom continues as Abbey relaxes lending rules to X5 to further inflate the housing bubble
Housing-Market / Strategic News Nov 01, 2006 - 09:33 AMBy: Sarah_Jones
The Abbey is to offer home buyers mortgages of up to five times their salary to help them cope with the booming housing market. The traditional limit has been 3.5 times salaries which has gradually been relaxed over recent years by many of the prime mortgage lenders and in some cases will lend as much as 7.5 times income depending on an individual's circumstances.
'With house prices rising and the market going that way, people are having to borrow more to be able to afford a home,' an Abbey spokesman said last night.
'What we are doing is offering people the opportunity to borrow up to five times their salary. This is all dependent on affordability, salary, credit rating and deposit. We do not want to bankrupt anybody by doing this, but the high earners out there, with healthy deposits behind them who want to buy these houses that are just slightly out of reach will now be able to do that.'
Earlier this week, figures revealed that house prices across the UK had almost trebled in the last decade. Figures from Halifax showed that the average house price had risen 187 per cent from pounds 62,453 in the first quarter of 1996 to pounds 179,425 in 2006's third quarter - an average increase of 10.6 a year.
Though in reality five times salary is a good headline grabber, but five times will only available to people who pass the credit scoring with flying colours. Those that don't have an A1 credit score can expect to get somewhere around 3.6 times salary. Abbey also puts its applicants through an affordability check, assessing outgoings and income. Additionally the provision that borrowers must have a 25% deposit will effectively shut the door on many first-time buyers and thus aimed at second or third time buyers, i.e. those who have already made money on the property ladder.
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