A few weeks ago, in the waiting room of a dentist who looks like a cross between Joseph Goebbels and Mr Bean, I read a dog-eared article in The Times advising budding homeowners to think twice before they buy that Taste the Difference steak.
Why? Because, in the eyes of lenders, eating steak could make them appear decadent and spendthrift — as a result of which they may find it difficult to have a mortgage approved above 75% LTV.
Two thoughts went through my mind simultaneously, like 36 grams of lead. The first was renewed disgust at the effete and sickly age in which we live, an age where people might make small, but frankly terrifying, adjustments to their lives in order to meet the lending criteria of a faceless institution.
There is no doubt in my mind that, when someone chooses a tin of corned beef and bottle of Jacob’s Creek over a ribeye and premium Argie Malbec in order to improve their chances of ‘getting on the property ladder’, the Foucauldian nightmare is real.
The second thought was that the entire mortgage industry is built on a misunderstanding. The misunderstanding, and it’s a fundamental one, is this: people with a cautious approach to money, and life in general, are low risk and a safe bet. This, of course, is absolute bunkum.
In reality, it’s the people who live like each day is their last, the ones who continually max out on their credit cards in order to wring every ounce of pleasure out of this miserable life we’ve all been thrown into, who are a far safer bet.
The reason for this is that it’s the people with a general to-hell-with-it-all attitude, those with nothing but contempt for risk, financial or otherwise, who will generally find a way through, if only to satisfy their drives and urges — and somehow, along the way, they will meet their mortgage payments because vices are generally more enjoyable at room temperature.
People who scrimp and save, on the other hand, those who have a rainy day fund and pay off their credit cards in full each month, will not only, as a rule, be less intelligent (intelligence always veers towards excess), but they will also be far less likely to ‘pull it out of the bag’ and find an alternative revenue stream should the shit hit the fan and their job be lost or company go under.
They simply won’t have the wherewithal of the libertine – and will instead freeze like a lamped rabbit.
For a year or so now the lending industry has been implementing the procedures and rules brought in with the Mortgage Market Review (MMR). The irony is that it’s the MMR, and the obsession with affordability, which is gearing the entire industry on the most dangerous borrowers of all: people who live within their means.
Dominic Hiatt is the founder of Just In Time PR, the results-based PR agency. Follow him @dom_justintime (You may enjoy it, but at your own risk – ed.)