Low- or no-deposit deals and higher income multiples have played a welcome part in the latest wave of innovation taking place in the mortgage market. Yet borrowers are still facing a tough time getting onto the property ladder, according to Family Building Society’s business development managers (BDMs) Neil Cadwallader and Arif Kara during a video discussion held in partnership with Mortgage Solutions.
Cadwallader said: “The Financial Conduct Authority is trying to cajole lenders into reviewing their [loan to income] limits and [income] multiples. But in the background, we’ve all seen in the last month or so that [Office for National Statistic] data goes against that, driving down affordability.
“It’s like giving with one hand and taking away with the other. Because of that, we need higher-LTV products to get people out of rented accommodation and onto the property ladder.”
Family Building Society increased its maximum LTV to 100% earlier this year. To qualify, borrowers’ families can either opt for a collateral charge to be placed on family property or they can deposit their savings in a secure account. Either option is for a period of five years.
By using this structure, the building society is able to accept more applications from borrowers using a flexible underwriting approach.
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Cadwallader added: “There are a number of high-LTV mortgages out there, but if I’m totally honest, the ability of someone who applies to attain that mortgage with other lenders has been quite hard.
“There are quite a few different hurdles for people to jump through.”
Watch the full video here:
This is the second video in a three-part series. You can watch the first instalment here.
