You are here: Home - News -

Survey shows lenders are not relaxing credit standards

  • 10/08/2001
  • 0
Contrary to popular belief, lenders are not unduly relaxing their credit standards, according to a n...

Contrary to popular belief, lenders are not unduly relaxing their credit standards, according to a new study by the Council of Mortgage Lenders (CML).

The research found that the number of borrowers judged to be over-stretching themselves through high income multiples or high percentage loans has not increased for almost a decade.

The number of borrowers who took out a mortgage loan for the full value of the property or more was around 25% of new loans in the late 1980s. This dropped sharply in the 90s and has remained constant at between 4% to 5% ever since.

In addition, while the average income multiples have risen to around 2.25% there has been a negligible increase in the number of borrowers requiring four times income or higher.

It is thought that risk assessment techniques have become more sophisticated with income multiples seemingly recognised as a clumsy indicator of credit worthiness. Jennifer Stoddart, senior press officer at Nationwide, said: ‘We now base all our assessments on affordability models which look at the income and the out-goings and show what is left to pay the mortgage, although a number of lenders still use income multiples.’

However, the CML warns lenders to rebe vigilant to ensure that borrowers do not get into difficulties using new products such as flexible mortgages as a way to increase their borrowing.


There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
MHBS sees net mortgages rise to 22% of business

Market Harborough Building Society (MHBS) has reported almost a quarter of all their mortgage busine...