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.

Comments

01 Nov 06, 13:50

Re: The UK Housing Boom continues as Abbey relaxes lending rules to X5 to further inf

For every irresponsible lender there must be an irresponsible borrower

01 Nov 06, 13:54

Re: The UK Housing Boom continues as Abbey relaxes lending rules to X5 to further inf
cannot understand how anyone would be stupid enough to take this out! We currently overpay greatly on our mortgage (well we are saving 115% of our current mortgage each month to pay off a lump sum when the mortgage stops being fixed but it amounts to the same thing i suppose) to the extent that our payments are equal to what they would be had we taken out a 5x joint salary mortgage. We have no kids, pay no council tax, have no car to run, no real luxuries apart from one ok holiday a year and do sometimes struggle to save the amount we do but we have a choice and dont need to do this but we should only have to for 4 years luckily, and will obviously save less if/when we have kids or other responsibilities.

How people can knowingly let themselves in for the whole forseeable future with no choice and no way out, when I cannot see any way (and more to the point if they have any sense surely they agree) they could afford the repayments really are crazy!

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