Property News · July 21, 2018

The ‘monster’ mortgage is back – is it a risk?


A leading bank has begun offering first-time buyers loans of 5.5 times their income – and they only need a tiny depositAfter the financial crash struck in 2008, loans to first-time buyers were immediately slashed. There would be no more jumbo-sized mortgages of five times income or more. There would be no more 95% or 100% loans. Buyers would need a large deposit. But this week Clydesdale Bank said it will grant first-time buyers mortgages of 5.5 times a borrower’s income and lend up to £600,000 – and the buyer only needs a 5% deposit.The product has sent shockwaves through the mortgage industry, which was plagued with accusations before the crash about “reckless lending”. In November 2006, Abbey (now Santander) began offering mortgages of five times salary. Vince Cable, then the Liberal Democrats’ Treasury spokesman, called the news “very alarming”, adding that it was “likely that these irresponsible lending practices will lead to financial disaster for many people”. Continue reading…

Source : theguardian.com
Read more…The ‘monster’ mortgage is back – is it a risk?

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