An increase in long-term fixed mortgages will see lenders offering loans at higher income multiples, according to the Building
As the Treasury looks to encourage more consumers to look to the long-term fixed market ahead of expected int-erest rate rises, the BSA bel-ieves that lenders will start to offer more loans at higher income multiples.
The trade body says lenders will be keener to provide loans at higher multiples because long-term fixes offer greater security over a longer period.
A number of lenders are believed to be developing long-term fixes that will be offered at five and six times income.
BSA spokeswoman Rachel Blackmore says: “There will be a need for higher income multiples which will fuel the lending market. Long-term fixes allow lenders to mitigate their risk and will open the way for different types of loans.”
London & Country mortgage expert David Hollingworth says:
“Lenders are already offering enhanced multiples. Gordon Brown's moves to increase stability in the market by pushing long-term fixes could backfire because people will borrow more and it could fuel house price inflation again just as prices are parachuting down.”