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Lenders and borrowers becoming "more confident"

The mortgage market has been transformed in recent years due to rising house prices and low interest rates, making borrowing easier and cheaper for today's homeowners, it has been claimed.

According to the Times, this change has had a significant affect on the wider credit market, with both lenders and borrowers growing in confidence and prepared to loan and borrow larger sums than 15 years ago.

The article also states that because mortgage lenders now assess a variety of factors when making a mortgage offer as part of an "affordability model", rather than basing their decision primarily on an applicant's income multiple, a more responsible and manageable lending culture has emerged overall.

"Basically, borrowing is cheaper. So someone with a mortgage of 3.5 times salary in 1992 who has a five times salary today is now devoting roughly the same part of their income to their mortgage repayments," commented Ray Boulger of independent mortgage broker John Charcol.

The Council of Mortgage Lenders recently said that homeowners whose finances have tightened due to recent interest rate rises should plan ahead in all aspects of their finances in order to get the best deals.

See how much you could borrow with a home loan from Lombard Direct.

13/06/2007 17:27:31

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