Rising house prices and low interest rates mean that lenders have been forced to change their procedures with regard to homeowner loans, it has been claimed.
Banks and building societies are now offering increased salary multiples, with the former standard of 3.5 gradually becoming replaced with multiples of five – and sometimes higher.
Ray Boulger, of mortgage broker John Charcol, told the Times that “over the eight years the range of bank interest rates has only been between 3.5 per cent and six per cent”.
He feels that this means borrowing is cheaper than it has previously been, making both borrowers and lenders “more confident”.
“So someone with a mortgage of 3.5 times salary in 1992 who has a five-times salary today is now devoting roughly the same part of their income to their mortgage
repayments,” he explains.
In related news, the Bank of England’s monetary policy committee has today voted to leave the base rate of interest unchanged.
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