Accord managing director Linda Will says lenders offering very high income multiples are making housing even less affordable and stopping the market from correcting.
Will says market adjustments are typically driven by a lack of affordability but the necessary correction is not happening because lenders are too willing to satisfy broker and consumer demand for less stringent lending controls.
She says: “Brokers are always whingeing at lenders saying they need higher income multiples but I just do not think that is the answer. Lenders are doing no one any favours by giving borrowers money they cannot really afford. Also, by constantly talking up what is available, you are stoking the fires of house price inflation.
“To keep trying to find ways of justifying lending people more and more stops that adjustment and makes housing less affordable. I think it is quite important we understand the cause and effect.”
Accord offers up to five times income but Will claims it would not go any higher in the current climate. It also lends up to 115 per cent loan to value for high-end professionals.
Will says: “It is quite interesting that just as rates go up and things might start to look a tad less attractive with house prices slowing a bit, we have got half a dozen other lenders piling into 100 per cent-plus lending. Timing is everything and we are quite cautious about where we think things might go.”