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High five gets a welcome

John Charcol senior technical director Ray Boulger says Abbey’s new offer of five times income multiples is a welcome move.

He says such loans are suitable for some borrowers and that similar size loans have been around in the market for some time without any problems being experienced.

Data from Moneyfacts shows that Abbey is not alone in offering such deals, with Darlington Building Society offering up to six times income while Abbey’s criteria are tighter than lenders such as Accord.

Some commentators have attacked Abbey’s product as encouraging high levels of debt but the lender stresses that its product is only designed for people with a high credit score earning at least 60,000 a year.

Boulger says: “It has been possible to get similar loans from other lenders for a while. Old-fashioned income multiples of around 3.5 times income are as outdated as the dinosaur and do not reflect current market conditions.

“While lenders must carefully consider each innovation before launching it, there must also be an onus on the borrower to take responsibility for their actions. There will be some who feel perfectly comfortable borrowing five times their income because they live a lifestyle which means they can afford it.

“However, there are others who for one reason or another will not be able to cut back enough on their spending to afford a mortgage of this size and so for whom this size of mortgage is not suitable.”

Abbey mortgage product executive Nici Audham Gardiner says: “We have made changes to our Abbey mortgage proposition to help more people purchase the home they want.”

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