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CML says FSA is excessive rather than the lenders

The Council of Mortgage Lenders is contesting FSA claims that lenders are

repeating the mistakes of the late 1980s through excessive lending.

In its latest survey of market trends, the CML says first-time buyers are

borrowing 2.28 times their income while existing homeowners are taking out

loans of 2.14 times their earnings.

These are nearly a third lower than the FSA figures released in recent

weeks. The FSA survey of the nine top lenders found that the upper ranges

are at 3.5 to 3.75 times income. But the CML is stressing its research

covers the whole lending market and so gives a more accurate picture.

It also says the average loan-to-value ratios have stayed virtually the

same for the last 18 months. First time buyers are receiving loans that are

worth 78 per cent of the value of the property, the same rate as January.

Other numbers showed total gross lending to be £7.8bn in February. This is

up from £7.3bn in January and last February&#39s total of £6.1 billion. While

down from peaks last summer of £11.8bn, the CML says that such a decrease

is normal as consumers tend to buy less in the early months of the year.

The average interest rate for new mortgages was 6.38 per cent, up from

5.88 per cent in January.

CML director general Michael Coogan says “These figures are well below the

upper ranges of 3.5-3.75 times income cited by the FSA.”

The FSA says it is in the early stages of its work and says it will have a

better idea of the situation later this year.

Borrowers seeking higher LTVs, p12


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