A mortgage lender has extended its income to loan ratio to seven in a move reminiscent of the pre-credit crash of 2008-09.
Loan rules were tightened after the financial crisis, when many people defaulted on their mortgages with terms that were widely-recognised as too risky.
Significant extension
Now, we appear to be going full circle with April Mortgages’ announcement that it will issue home loans on a seven times income basis.
Currently, the most generous mortgages are usually four-and-a-half times income, so April’s offer is a significant extension.
Borrowers have to commit to a 10 or 15-year fixed deal to secure the new multiple income offer.
Owning a home has become harder to achieve.”
Rachael Hunnisett, Director of Mortgage Distribution at April Mortgages, told This is Money the move will help people unable to afford house prices as they continue to rise faster than wages.
“The housing market has shifted dramatically. With house prices rising far faster than wages, owning a home has become harder to achieve – even for those with steady incomes,” she said.
“We’re committed to making mortgages simpler, more flexible, and better suited to the way people live today.
“That’s why we’ve added a real borrowing bounce to our modern mortgage products – giving eligible borrowers the chance to access up to seven times their income.
“When combined with our thorough affordability checks and the long-term certainty of a 10 or 15-year fixed rate, we’re helping people not just get on the property ladder, but stay on it with confidence.”
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