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Keep track of borrowing

Do brokers and advisers believe that what is needed in the mortgage market today are generous income multiples as high as seven and even higher on fast-track loans?

Are we losing what should be a restraint on borrowing levels in financially more difficult times if people believe that they have some sort of divine right to overstretch themselves to get that dream home?

This week one broker, Andrew Oliver, warns that he believes people are being offered loans they cannot afford.

Are lenders meeting their requirements for responsible lending? It is difficult to say.

If we do have an indebted country in addition to an indebted population and, of course, an indebted economic superpower across the pond is it not time for a bit of readjustment?

And would it not be better if that readjustment came with people readjusting what they are borrowing, at least until we see what happens in the economy as a whole and interest rates in particular?

The world economy has taken a massive body blow, with imprudent mortgage borrowing and lending in the US at the heart of the problem and yet in many parts of the world there is still an inflation risk.

Some economists even worry about one of the grimmest of economic scenarios – stagflation in the UK.

Money Marketing has to wonder if many people would not be better being a little more careful. These are difficult times for a lot of lenders and brokers. But the path that people should be steered down is surely a prudent one.

The challenge at all levels whether from the chairman of the Federal Reserve, the Chancellor and the governor of the Bank of England and lender, broker and borrower is to take the heat out of the situation but also to manage things so that we get back to a position of long-term stability. Fast-track loans offering huge income multiples just do not feel like the correct approach in these difficult times.

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