Posted on June 3, 2022

Property to crash in 2022?

HOUSE PRICES have hit dizzying highs despite the UK’s crumbling economy and many now expect a full-blown crash this year. Yet a house price crash may be averted for a surprising reason.

As the cost-of-living crisis intensifies the doom-mongers are shouting about the dangers of a property crash again. Yet there are good reasons why that may not happen despite today’s growing uncertainties.

There are good reasons to be worried about the property market right now.

The average homeowner with a £224,000 mortgage is paying £1,000 a year more interest a year as result of the BOE hiking rates from 0.1 percent in December to one percent today.

Base rates are set to climb higher and many homeowners will struggle as every other household cost soars at the same time.

Banks and building societies are already marking down properties during mortgage surveys, knocking £20,000 or £30,000 off the valuation to protect themselves.

That makes it harder for borrowers to raise the money they need, forcing some to pull out of their purchase. Property chains could collapse as a result.

It’s undoubtedly a dangerous time for the housing market.

This had led to growing caution among buyers, sellers and lenders, according to the Royal Institute of Chartered Surveyors.

Estate agents report having to do a lot more legwork for sales, as prospective buyers take their time, Hargreaves Lansdown’s senior personal finance analyst Sarah Coles said.

Sources report that buyers are finding it harder to get mortgages, as lenders tighten affordability criteria. “This is causing some chains to fall apart, as many banks don’t think properties are worth their asking price,”

By every rational measure, today’s dizzying house prices should crash back to earth. The average property now costs an incredible 9.1 times the average salary in England, way above the long-term figure of four or five times.

First time buyers are struggling to build big enough deposits. Seven in 10 have now put their plans on hold for at least two years, Nationwide reports.

So why won’t prices crash?

One reason is that buyer demand is still strong, while the supply of property is weak.

House prices jumped an incredible 10.8 percent in the last year, which includes a rise of 1.1 percent in April alone, adding £3,078 to the average home.

This has lifted the average property price to another new record high of £286,079, and Halifax managing director Russell Galley said activity shows “little sign of abating” amid strong buyer competition.

Demand continues to outpace supply due to the “insufficient number of new properties coming onto the market”.

Galley anticipates the rate of house price growth will slow, but only by the end of this year. He does not foresee a crash.

Another reason the market won’t crash is that owners are taking action to protect themselves from mortgage hikes, said Joshua Elash, director of property lender MT Finance. “They are increasingly locking into longer term fixed rates, in expectation of further rate rises.”

Also, mortgages remain dirt-cheap by historical standards. It is still possible to get a five-year fixed rate charging just 2.5 percent. When property prices crashed 20 percent between 1989 and 1993, mortgage rates hit a staggering 15 percent.

That would trigger the mother of all meltdowns today, but that isn’t going to happen.

Here’s the most unexpected reason why prices won’t crash.

If the UK is heading into recession, the Bank of England is likely to scale back its base rate hikes, said Rupert Thompson, investment strategist at Kingswood.

As a result, base rates may only climb to just 1.5 percent or two percent, still low by most standards.

This would keep mortgages affordable, and head off any crash. Incredibly, this means a recession could actually ride to the property market’s rescue. Few will have seen that coming.

There is also the fact that only around one third of properties in the UK are occupied by mortgage payers, the other third are owned outright with the remainder being rented. Of the third that pays a mortgage, many are on fixed term deals, with a few having fixed deals for five or ten years. The immediate effect will probably only be felt in the next year or two, until the rises in energy this year, which account for about 75% of the inflation figure, taper off.

There is a great possibility that interest rates will rise to as much as 2.5% by next year, though nothing is certain, then they will peak and gradually come down. The fact that there are some great long term fixed rates, indicates that those in the know, are confident that the rise in rates is only temporary, hence the reason they are offering to lock in good rates (for them) for a long time.

Another factor that differentiates the current climates from the pas, is the supply of money. Since the crash of 2008, banks have not only been super careful with lending, but the gap, between the base rate and the variable mortgage rate has been higher than ever.

Previously, the gap was around 1% at the most, but for much of the last 14 years, the base rate has been around 0.5% but the variable rate has been as much as 5%, which is a mark up of 1,000% and since the pandemic, when the base rate was lowered to 0.1%, some lenders were still charging a variable rate of 5%, that is a mark up of 5,000%! So as you may gather, the banks are awash with money and the availability of funding, will invariably keep the market safe.

It seems like the doom-mongers may have to wait a little longer for the big crash.

Posted on June 3, 2022

Northampton property market update June 2022

House Prices in Northampton

Properties in Northampton had an overall average price of £271,525 over the last year.

The majority of sales in Northampton during the last year were terraced properties, selling for an average price of £226,847. Semi-detached properties sold for an average of £251,378, with detached properties fetching £392,135.

Overall, sold prices in Northampton over the last year were 4% up on the previous year and 14% up on the 2018 peak of £239,048.

Average Property Price

Detached

£418,237

Semi-Detached

£261,824

Terraced

£228,214

Flats

£148,903

Northampton has a broad cross-section of property, with more a good supply of homes in the upper quartile.

The market remains very strong and the figures clearly demonstrate that it continues to be a seller’s market.

The most expensive property to have within the last year is still

5, Spyglass Hill, Northampton, Northamptonshire NN4 0US

Posted on May 6, 2022

Will the Northampton housing market collapse in 2022

Is the market in danger of freefall?

There’s no doubt 2021 was a bumper year for house prices. According to the latest ONS House Price Index, prices increased by nearly 11% year on year. The UK property market was buoyed by low interest rates, the Stamp Duty holiday and changing work habits. But will house prices continue to rise in 2022?

Many experts in the industry believe that house prices will finally begin to fall this year.” That would be welcome news for first-time buyers and upsizers.

Let’s take a closer look at the outlook for house prices in 2022, and reveal the experts’ predictions.

If you were shaken by the inflation figures from the Office for National Statistics, showing the Consumer Price Index in March was up seven per cent year-on-year, I am afraid I have to warn you that there will be more bad news in store next month. City predictions are that it will climb to around 8.8 per cent before falling back a bit through the summer. The number for the retail price index, the traditional measure, was even higher at nine per cent.

But there was another inflation figure published by the Government yesterday, which generated rather less attention. It was higher still: 10.9 per cent. That was the rise in house prices in the year to February. The fact that there was so little apparent concern says a lot about public attitudes to inflation.

Rationally, the amount we have to pay for somewhere to live is just as important as the amount we pay for other necessities such as food and fuel bills. We are ambivalent about house price inflation because for the people who own their homes, rising prices are rather a good thing. Some 65 per cent of households in the UK are homeowners, down from a peak of 71 per cent in 2003. But for most people home ownership would be the tenure of choice.

In 2014 the British Social Attitudes Survey found that given a free choice, 83 per cent would like to own their homes. On the other hand, there was strong push-back against home building, with 45 per cent of people opposing new homes being built in their area. In the south of the country that proportion rose to 50 per cent.

A mountain to climb for young people

There is the problem. We want to own our homes but we don’t want new ones to be built. You don’t need to be an economist to appreciate that if you restrict supply in the face of rising demand, prices are likely to go up. And so it is with homes in the UK. The average price for an existing property is now £266,669 and £352,909 for a newly built one. The average first-time buyer paid £230,593, up 10.1 per cent on a year ago, a sum that for many young people who don’t have family help is a mountain to climb.

So what happens next? Much will depend on the Bank of England and its path of interest rates. They are already on the move, and rose again to 1% yesterday, We will get its quarterly Monetary Policy Report then and that will give us more of a feeling for the future both of inflation and of interest rates. Incidentally, it used to be called the Inflation Report. They changed the name in November 2019, just before inflation began to take off, a shift that looks pretty silly now. I think they should eat humble pie and change it back.

Present surge expected to tail off

But there won’t be much about house prices. What will happen to them? Well, a new set of forecasts have just been published by experts, and the message there is that the present surge will start to tail off from now on.

Many in the industry think the average increase this year will be about five per cent, falling to one per cent in 2023 and two per cent in both 2024 and 2025, then climbing by three per cent in 2026. There will be regional variations, with the East of England and the East Midlands doing rather better than London or Scotland, and these are averages, so there may be some local declines.

It appears that three things stand out. One is that nobody is predicting a crash, such as took place after the banking crisis and subsequent recession of 2008-09. The second is that there will be a couple of years, maybe longer, where house prices will rise more slowly than overall inflation. So homes will become more affordable, relative at least to goods and services, and almost certainly to income too. And third, even with this quite sober outlook, prices in 2026 will, at least on average, be 13.6 per cent higher than they are now. This may not be a great time to buy a home, but it is not a dreadful one.

These are brave forecasts from industry experts who deserve credit for their work. The overall message is that buying and selling homes will not bring easy profits, as that has for many people over the past few years. People won’t be boasting that they made more from their house than they did from their jobs. That’s a good thing, for in broad social terms to have homes become more affordable for young people must be right. But a crash would do no good either. I think and hope Knight Frank is right on that one too.

Further thoughts

We’re not expecting a crash in house prices because while interest rates have to rise, they are not heading into the double digits, or anything close, as they did in the 1970s and 1980s. The overall demand for housing in the UK will continue to rise for two main reasons.

One is that the population is increasing and will continue to do so for the foreseeable future. The other is that people need bigger homes as a fair proportion of us will continue to work from them, at least part-time.

What might destabilise the market, overriding these two demand factors, would be distress sellers: people who have to sell fast because they have lost their jobs or because mortgage rates have risen too fast. As yet there is zero sign of the job market going into reverse. We learned this week that unemployment at 3.8 per cent is the equal lowest since 1974-75 and the number of unfilled vacancies at 1,288,000 the highest ever.

The labour market will cool eventually, but that will take time and borrowers will therefore have time to sort out their finances. And as for mortgage rates, the very fact that there is so much debt around means that rates don’t have to go so high to curb inflationary pressures. So a plateau in house prices as wages gradually catch up seems more likely than a sudden fall.

Young central bankers not experienced enough

But it would be right to end with a warning. It is always tricky to end a boom without pushing the economy into a slump, and the present generation of central bankers have no experience of coping with runaway inflation. They are too young. Andrew Bailey, the current governor, joined the Bank of England in 1985, five years after the US Federal Reserve had famously increased its interest rate to 20 per cent, thereby knocking inflation on the head – but causing a recession.

The present generation – and this is not to get at the Bank of England in particular – have allowed the worse inflation for 40 years. The question is, do they have the judgement to curb it now without triggering another recession?

Conclusion

It is unlikely that prices will head south in a significant way, although there will definitely be a correction and isolated minor falls in prices, overall, the market will remain strong. Rents have been increasing, which will ensure they keep pace with rising house prices and only one third of UK homes are mortgaged, with another third being owned outright and the other third being rented. Of the third that are mortgaged, many of them are on fixed deals which should see them through this year and in to next year, by which time the current rises in prices will begin to fall of the RPI, provided that inflation does not spiral out of control, the risk of anything dramatic is negligible.

Posted on April 26, 2022 April 26, 2022

Buckinghamshire Market Update April 2022

An overview of the property market in Buckinghamshire

House Prices in Buckinghamshire

Properties in Buckinghamshire had an overall average price of £490,185 over the last year.

The majority of sales in Buckinghamshire during the last year were detached properties, selling for an average price of £786,120. Semi-detached properties sold for an average of £410,991, with terraced properties fetching £328,527.

Overall, sold prices in Buckinghamshire over the last year were 5% up on the previous year and 16% up on the 2019 peak of £422,735.

House prices increased by 0.7% – more than the average for the South East – in Bucks, new figures show.

The boost contributes to the longer-term trend, which has seen property prices in the area achieve 9.4% annual growth.

The average Buckinghamshire house price was £447,579, Land Registry figures show – a 0.7% increase on October.

Over the month, the picture was similar to that across the South East, where prices increased 0.5%, but Buckinghamshire underperformed compared to the 1.2% rise for the UK as a whole.

Over the last year, the average sale price of property in Buckinghamshire rose by £38,000 – putting the area 38th among the South East’s 64 local authorities with price data for annual growth.

The best annual growth in the region was in Hastings, where property prices increased on average by 22.4%, to £276,000. At the other end of the scale, properties in Woking gained just 3.7% in value, giving an average price of £442,000.

The new data released this week is accurate up to December.

Winners and Losers

Owners of semi-detached houses saw the biggest improvement in property prices in Buckinghamshire – they increased 0.8%, to £440,633 on average. Over the last year, prices rose by 10.1%.

Among other types of property:

Detached: up 0.8% monthly; up 11.8% annually; £820,452 average

Terraced: up 0.5% monthly; up 7.2% annually; £342,687 average

Flats: up 0.4% monthly; up 5.8% annually; £235,246 average

First steps on the property ladder

First-time buyers in Buckinghamshire spent an average of £330,000 on their property – £26,000 more than a year ago, and £38,000 more than in November 2016.

By comparison, former owner-occupiers paid £534,000 on average in November – 61.7% more than first-time buyers.

How do property prices in Buckinghamshire compare?

Buyers paid 21.3% more than the average price in the South East (£369,000) in November for a property in Buckinghamshire. Across the South East, property prices are high compared to those across the UK, where the average cost £271,000.

The most expensive properties in the South East were in Elmbridge – £692,000 on average, and 1.5 times as much as more than in Buckinghamshire. Elmbridge properties cost three times as much as homes in Southampton (£233,000 average), at the other end of the scale.

The highest property prices across the UK were in Kensington and Chelsea.

Factfile

Average property price in November

Buckinghamshire: £447,579

The South East: £369,093

UK: £270,708

Annual growth to November

Buckinghamshire: +9.4%

The South East: +9.6%

UK: +10%

Best and worst annual growth in the South East

Hastings: +22.4%

Woking: +3.7%

Posted on April 25, 2022

Market Update Executive Homes in Northamptonshire NN14 April 2022

The state of the market in NN14 this month?

In the past year, NN14 has seen a lot of activity, with a total of 519 properties progressing through to completion within the last 12 months.

Properties in NN14 had an overall average price of £301,871 over the last year.

The majority of sales in NN14 during the last year were detached properties, selling for an average price of £409,955. Semi-detached properties sold for an average of £234,011, with terraced properties fetching £200,269 and flats at an average of £116,773.

Overall, sold prices in NN14 over the last year were 18% up on the previous year and 31% up on the 2015 peak of £230,949.

There is a total of 615 properties on the market, of which 430 are SSTC, with only 186 available. However, when we look at luxury property, starting at £500,000, the availability drops significantly.

Northamptonshire has benefitted from strong growth over the last 18 months, with NN14 being at the forefront of the market. With rolling countryside, easy access to arterial road networks and an abundance of beautiful villages, it remains a favourite for those looking to move to a quiet location, with easy access to rural and urban locations.

As with many other parts of the country, there is a significant fall in available property on the market, which continues to ensure that NN14 clearly remains a seller’s market.

However, as the market stabilises, the figures suggest that the market will gradually settle down, ensuring that property prices will continue to remain strong, well in to the Q1/Q2 2023.

Posted on April 21, 2022

Central London Market Update April 2022

The state of the market in Central West London

The average property price in West London postcode area is £1.1M. The average price declined by £-190.1k (-14%) over the last twelve months. The price of an established property is £1.2M. The price of a newly built property is £702k. There were 5.5k property sales and sales increased by 9.2% (497 transactions). Most properties were sold in the over £1M price range with 1650 (30.0%) properties sold, followed by £500k-£750k price range with 1348 (24.5%) properties sold.

West London postcode area	England and Wales
£1.1M	£342k
average property price	average property price
-14%	5%
average price percentage change	average price percentage change
£-190.1k	£15.8k
average price change	average price change

London house prices ‘overvalued by up to 50%’

Official data for January reveals the average price fell by 1.8% to £510,102

London’s property market is “overvalued” by as much as 50% and this has raised fears of a “looming correction”, The Telegraph reported.

S&P Global Ratings, an American credit rating agency, told the paper that “a combination of low rates, the stamp duty holiday and excess savings amid the pandemic have driven property prices higher, particularly in London and the South East”. Researcher Alastair Bigley warned that prices were likely to fall. “We expect a greater correction in property prices in an overvalued market,” he said. Meanwhile, outside London, S&P estimated that property was overvalued by 20%.

According to the latest house price index issued by property website Rightmove, the average home in London now costs £664,400. And the average time it takes to sell a home in the capital dropped from 68 days to 57 days in February – “another sign activity is picking up”, said the London Evening Standard.

Rightmove’s data also revealed that the UK house price average is now £354,564 – the first time it has exceeded £350,000.

Property prices fell by 1.8% in January

The average property value in London was £510,102 in January 2022 – down 1.8% from December 2021, according to official data published by the HM Land Registry and the Office for National Statistics (ONS).

Regional data from the house price index revealed that London saw the lowest annual price growth, an increase of 2.2%, and the 1.8% dip was the most significant monthly price fall.

The London property market is one of the most robust markets in the world. The market is still being affected by a combination of factors that will take a long time to balance out.

Firstly there was Brexit, which resulted in less demand for housing in the capital, as many companies and workers either put their plans on pause, pending a clearer picture of how leaving the EU will change things, then there was the lockdown, a once in a lifetime event that came out of nowhere, forcing companies to switch to a work from home policy that changed the demographics significantly and with many workers still not travelling in to work, the city is still not back to normal.

Another consequence of the lockdown, was the number of EU workers who decided to leave, figures suggest that this may have been up to one million in London alone. This was then followed by constant uncertainly about the pandemic and to top it all, February the 24th saw the invasion of Ukraine by Russia, which has resulted in a significant fall in investment from the Russian market as sanctions were imposed. This happening at the same time as high inflation caused by the bounce-back along with the first interest rises in a long time, as the markets deal with massive price rises, due to delays in the supply of materials around the world, post-pandemic.

Despite all these factors, which are referred to as the ‘perfect storm’ London is still holding up relatively well and there will no doubt be a striking point where investors will begin to enter the market in larger numbers, placing their money in to one of the safest markets in the world.

Posted on April 7, 2022

Bedfordshire Market Update April 2022

An overview of the property market in Bedfordshire

Properties in Bedfordshire had an overall average price of £340,159 over the last year. The majority of sales in Bedfordshire during the last year were semi-detached properties, selling for an average price of £326,370. Terraced properties sold for an average of £269,621, with detached properties fetching £501,950. Overall, sold prices in Bedfordshire over the last year were similar to the previous year and 8% up on the 2019 peak of £314,356.

This unprecedented price level is being stoked by the greatest imbalance between buyer demand and the number of properties available for sale that we have ever measured at this time of year. This is the strongest spring sellers’ market that we have ever seen in several metrics. Tim Bannister, Rightmove’s Director of Property Data comments: “There’s a hat-trick of reasons for home-owners to follow the normal trend and make it their goal to sell this spring. Firstly, the potential to achieve a record price for their property.

“Secondly, the imbalance between high buyer demand compared to low available property supply is the greatest that we have ever seen for the start of a spring market, meaning that the chance of being able to pick and choose between several suitable buyers is strong. Thirdly, the proportion of properties finding a buyer within the first week is also at an all-time high for this time of year, so sellers with an appropriately priced and well-presented property can expect a shorter marketing period than the norm. Those who weren’t ready to take advantage of last year’s rush now have another chance to get on the market while these conditions last.”

There are now more than twice as many buyers as sellers active in the market, which is the biggest mismatch between supply and demand that we have ever recorded at this time of year. The speed of the market is further demonstrated by the fact that are there more than one in five (22 per cent) deals being agreed on Rightmove within the first week of being marketed.

This is double the figure for the same period in the more normal market of 2019. Almost half, 47 per cent, are having a sale agreed within the first fortnight, another indicator of high demand and the likelihood of finding a buyer quickly. While these unprecedented numbers are helping to drive prices to new records, they do also show that there are a number of properties that will remain on the market after this time and that may benefit from a price reduction.

BEDFORDSHIRE	ENGLAND & WALES
£334,000 – Average Property Price	£342,000 – Average Property Price
2% – Average Percentage Change	5% – Average Percentage Change
£6,700 – Average Percentage Change	£15,800 – Average Percentage Change

PROPERTY TYPE	OTM	SSTC	% SSTC	AVAILABLE	% AVAILABLE
ALL	7,524	5,218	69.35%	2,306	30.64%
HOUSES	5,235	3,841	73.37%	1,394	26.62%
FLATS	1,699	987	58.09%	712	41.90%
BUNGALOWS	476	323	67.85%	153	32.14%
LAND	67	45	67016%	22	28.20%
COMMERCIAL PROPERTY	177	118	54.12%	89	32.83%

Bedfordshire-property-sales-share-by-price-range

Bedfordshire-real-house-pricesCOMMENT

The Bedfordshire property market, whilst not the most active in the country, seems to be benefiting from sustained growth, with very little evidence that this will change. This is very good for confidence, which adds to the sustainability of the growth.

Posted on April 7, 2022

Market Update Executive Homes in Northamptonshire April 2022

What is the state of the market this month?

This table offers a snapshot of the market for Executive Homes in Northamptonshire, (over £500,000) for comparison, we are also including homes in all price brackets available across Northamptonshire too.

PRICE	OTM	SSTC	% SSTC	AVAILABLE	% AVAILABLE
ALL	6,629	5,094	76.84%	1,535	23.15%
£500,000+	914	609	66.63%	305	33.36%
£800,000+	196	131	66.8%	65	33.16%
£1,250,000+	70	42	60%	28	40%
£2,000,000+	12	6	50%	6	50%

Northamptonshire-house-prices-and-nearby-counties

Northamptonshire-house-prices

As we can see from the figures, the market is still positive, even at the higher end, although as the prices rise, the ratio of property on the market that is SSTC declines. This is to be expected of course, especially when we take in to account the additional stamp duty, that is payable at the higher end. This also indicates, that in order to achieve the best price for an executive home, it is always best to instruct an agent who specialises in that area of the market.

Posted on December 28, 2021

High loan-to-income mortgages: new home loans could give borrowers an extra £200k

Eligible homebuyers could get a mortgage worth seven times their salary for the first time in over a decade.

The new product from online mortgage lender Habito comes after the Bank of England separately announced plans to relax lending rules in December.

To qualify for Habito’s higher loan-to-income loan, applicants must have a basic salary of £75,000 or more per year.

Alternatively, one applicant in a joint application can borrow up to seven times their salary if they are qualified, practising and registered in one of 14 listed professions and earn a minimum of £25,000. Buyers must also have a 10 per cent deposit, and only one applicant in a joint application can borrow up to seven times their salary

The professions eligible for the mortgage are: police, firefighters, nursing, paramedics, doctors, accountants, barristers, teachers, engineers, lawyers, dentists, architects, surveyors and vets. Habito says this is because these professions offer a reasonable prediction of future earnings, job security and employability.

How much can I borrow for a mortgage?

Since the interest rate stress test was introduced in 2014 to make sure borrowers could afford to service their mortgage if interest rates rise, most lenders will only offer a maximum loan-to-income ratio of 4.5 times earnings. This has put buying a home even further out of reach for many buyers, especially in London where the average property costs 11.7 times the average salary.

Habito’s new lending rules could increase the amount a solo buyer earning £75,000 could afford to pay for a home by more than £200,000.

If their borrowing was capped at 4.5 times their income they could borrow £337,500. With a 10 per cent deposit this would get them a home worth £371,250. Borrowing seven times their income would offer £525,000. Adding the 10 per cent deposit would buy a home worth £577,500.

For joint applicants where one works in the specified professional fields and earns £25,000 and the other applicant also earns £25,000, their borrowing would be capped at 4.5 times combined salary, or £225,000. With the Habito One mortgage they could potentially get seven times one salary and five times the other, meaning they could borrow £300,000.

Is a higher LTI mortgage risky?

The online mortgage broker announced the enhanced lending criteria on its full-term fixed rate Habito One mortgage, which allows buyers to borrow at rates starting from 2.99 per cent for the entire term of their mortgage.

Borrowers on a fixed-rate mortgage usually need to remortgage after a certain period of time, often two, five or ten years, or else find themselves slipping onto their lenders standard variable rate, which can be expensive.

Habito says it is able to offer the higher loan-to-income mortgages because the interest rate on the loan is guaranteed for the entire length of the loan, reducing the risk of the borrower not being able to afford payments in future.

Daniel Hegarty, founder and CEO of Habito, said: “Longer, fixed-rate mortgages mean that customers are completely protected against any threat of fluctuating interest rates, in a way that shorter fixes of two or five years mortgage deals don’t allow for.

“As a lender that considers every applicant’s case individually, we’re confident that with suitable criteria in place, in the right circumstances, eligible customers can safely and securely boost their borrowing to buy the home that truly suits their needs and their life plans.”

Full-term fixed rate mortgages are not common in the UK but are already popular in other countries including France, Denmark and the US.

This is partly because British buyers worry about hefty early repayment charges to get out of a mortgage during the fixed period, for example if they need to sell their home.

Will I be able to get a mortgage at seven times my salary?

Some mortgage brokers expressed doubts about how many buyers would actually be offered mortgages at seven times income.

Mark Harris, chief executive of mortgage broker SPF Private Clients said: “With current regulations restricting each lender to 15 per cent of applications at over 4.5 times loan-to-income, one wonders whether lenders can get the volume of borrowing to truly make a difference.

‘While seven times income sounds high, will borrowers be able to get to that level once existing affordability rules are enacted? Even at lower loan-to-values, borrowers do not always hit the theoretical LTI caps.

“For those with one of the professional vocations listed, existing lenders already offer enhanced LTIs, so it is worth shopping around to find the best deal.”

Habito said that due to longterm fixes not being subject to the same regulations as short term fixes, the lender has no percentage cap on the volume of lending it can do at seven times.

Colin Payne of Chapelgate Private Finance pointed out that key workers pay significant pension contributions each month, making larger mortgage repayments out of their take-home pay potentially unaffordable.

He said: “The irony is it adds fuel to the fire in terms of house prices making that ‘forever home’ more unaffordable for many. It feels like a headline to increase enquiries and then offer alternative lending options, a ‘sprat to catch a mackerel’, and that cannot be the best outcome for buyers.”