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BSA sees high multiples for long loans

An increase in long-term fixed mortgages will see lenders offering loans at higher income multiples, according to the Building

Societies&#39 Association.

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&#39s 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.”

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