Each week, we also round-up the best comments, emails and letters to the site and pick one reader contribution as our Star Letter. This week’s award goes to:
Vince Cable: Cap mortgage lending at 3.5 x income
Gosh, how nice would it be if our leaders were better informed.
So, we have a London market fuelled by cash buyers, investment buyers and foreign money. This will not affect them.
We have a SE market driven by well paid London workers, often earning a multiple of the average wage, who are borrowing up to 5x their salaries (assuming they have large deposits, no or little other debt and few or no children – as per the new MMR affordability rules).
Is this a problem – well no, if you earn £200k per annum and a repayment mortgage of £1,000,000 on a five-year fixed rate will cost circa £5,000 / month, well you still have around £4,500 to scrape by on – not a problem I say.
Then you have the third market, say Cambridge upwards, where prices have barely risen (and are still lower than in 2007 in much of NI/NE/NW).
So ok, not everyone in the SE earns £200k, but you know what, if they earn £30k and have a wife and 2 kids, they wouldn’t get a lender to lend them 5x salary in the new MMR affordability world!
So, let’s rush ahead with a London centric, badly thought out policy, let’s keep fueling the market on one hand with HTB, then bring out poorly thought out and possibly impossible to regulate ‘capping’ powers. Brilliant.
RRJRRJ
