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Buyers offered mortgages ten times salary

12 February 2004
First-time buyers are being warned of the consequences of accepting "irresponsible" mortgages of up to ten times their salary.

The Evening Standard has reported that novice buyers are being offered unprecedented loans as house prices continue to increase.

But consumer groups and politicians are warning that the new generation of "superloans" could backfire, especially for middle-income buyers, if interest rates rise further.

Frances Walker, of the Consumer Credit Counselling Service, said: "We're concerned - the people who are most likely to get in trouble with debt are those on low to middle incomes who have stretched themselves to the limit to get a mortgage."

In the most extreme case an Evening Standard reporter, posing as a first-time buyer, was offered almost £350,000 on a £35,000 salary by Bank of Ireland Mortgages (BOIM).

Liberal Democrat Treasury spokesman Dr Vincent Cable said: "Lending at five or six times salary is bordering on the seriously irresponsible, because it assumes that the economy will not change."