Proposals to limit mortgages 'are ridiculous'

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Proposals to limit mortgages 'are ridiculous'

Wed 1st Jun 2011

MyMortgageDirect has slammed proposals to limit the maximum finance for mortgage products to three and a half times the buyer's household income.

Director of the company Catherine Hearnden claimed the plans do not take individual household expenditure into account and described them as "ridiculous".

She made her comments in response to a study conducted by the Institute for Public Policy Research (IPPR), which claimed that the UK's high loan-to-value ratio on mortgages could be responsible for the economic downturn.

Ms Hearnden said: "Affordability calculators are the way that you should asses the affordability on a mortgage, not a set limit of three and a half times [income] because some people can afford more."

Proposals from the thinktank also suggested a cap on lending at 90 per cent of a home's value in a bid to end the UK's "addiction to house price inflation".

Ms Hearnden noted that although the idea could be plausible, mortgage lenders needed to ensure there are appropriate initiatives in place to help first-time buyers.

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