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Last Updated: Saturday, 4 November 2006, 11:09 GMT
Have Your Say: Mortgage borrowing
A man with an empty pocket

Interest rates have been widely tipped to rise to 5% on Thursday and the housing market remains buoyant.

Meanwhile, Britain's second largest mortgage lender Abbey has said it will offer people five times their salary to buy a home.

And all this comes as new figures show record numbers of people have become insolvent and mortgage repossession orders reach a five year high.

With house prices so high and rates set to rise is it too risky to buy a home now or would you still take the plunge?

With Abbey offering mortgages of five times income, do you think banks are lending responsibly? Or is it up to us to borrow carefully?

Have you or someone you know taken on too much mortgage debt?

Read a selection of your comments below.


Do you mind not harassing banks for offering high income multiples? I'm having real difficulty getting people to lend me enough for the silly prices here in Cambridge, even though the payments would be less than my current rent - which I am affording fine. I'm therefore trapped out of owning by arbitrary factors.
Danny, Cambridge

High house prices and reckless borrowing could have devastating implications on this country. With two good salaries now required to manage mortgage payments (and not forgetting council tax, rising utility bills etc), how are couples expected to afford or raise a family? And those who recently stretched themselves for that one bedroom flat and thought they were safely on the property ladder are in for a harsh reality check. There is no ladder. Can you really afford an extra 100,000 for that three bedroom semi? Enjoy living there for the next 25 years.
Paul Turnbull, Tynemouth

Five times lending needing no deposit would be irresponsible, hence why it doesn't exist
Warren
Every mortgage has been designed for a purpose. The problem occurs when the wrong mortgage is selected. 125% lending is fantastic in certain circumstances. Five-times-salary with a 25% deposit is again a brilliant product, why? Because the deposit factor limits availability. Five times lending needing no deposit would be irresponsible, hence why it doesn't exist. Do I feel that the property market is over inflated? Yes Do I feel sorry for the first time buyers looking to purchase there first home? Yes Do I feel that the blame lies with the mortgage lenders? No, Life is full of choices, in hindsight some good and some bad, but all made of someone's free will. It's very easy to blame others when something goes wrong. In my experience everything starts with choice. People need to take more responsibility for their own actions.
Warren

I am somewhat encouraged by some of the comments against high borrowing facilities. I remember rates of 15% - that was tough! So, do the sums. The Treasury must also shoulder responsibility. Prudence is a word bashed around but look into average earnings, the hefty tax burden now, fuel costs, council tax plus 167 more stealths and effectively disposable income has diminished to alarming levels - little room for any additional expenses. If borrowing now, beware of the small print.
David Rumsey, Gosport

As I heard it put recently: "Buy real estate cos god isn't gonna create more land", which I think fundamentally makes investing in property and land a good investment, as long as the buyer has the time to ride the peaks and troughs of the market, both from a house price viewpoint and interest rates.
Lee Tomkins, Somerset

Ludicrous house prices are crushing people's ability to have meaningful lives outside work
David, London
It's a pity that we can't see the wood for the trees in this country. Ludicrous house prices are crushing people's ability to have meaningful lives outside work, start families, even leave the parental home. The consideration of property as an investment and arcane planning laws have combined to condemn the future of many - either to one of serfdom (mortgage slaves) or of uncertain or cramped living conditions. I can see a bleak future for this country that only a massive correction will resolve. It will be a bitter and very large pill to swallow for many people and have implications for many years to come. Without it though we are doomed. I watch with interest to see which one it is.
David, London

When my brother bought in 1985 all of his wages went on their mortgage and his wife's salary from her low paid job was all they had to live on. Now my best friend has bought a house with his girlfriend and they are in an identical situation. This is being repeated everywhere. This is when interest rates are historically low and unemployment is good. If interest rates rise it could be 1989 all over again.
Daniel, Plymouth

Three words spring to my mind: House Price Crash.
Billy Bob, Lewes

People are borrowing more and more to buy houses. This forces both partners to work, which has a detrimental effect on families, and society. It also increases risk, and thus pressure, as houses could be repossessed if either partner loses their job. Tying mortgages to a single income would gradually reduce house prices, making them more affordable, improve the quality of family life, and have a positive impact on so many areas of society.
Marc, Wakefield

Is this entirely the fault of the big bad banks? It is certainly not
Dr John Fowler, Knaresborough
I totally agree with Joanna from Ascot. House prices right across the UK have been very largely driven by the ever-increasing availability of credit - which hundreds of thousands of borrowers now find increasingly difficult to repay. It will only take one redundancy or further interest rate rises to tip people who are sailing close to the wind into the bankruptcy and IVA statistics. Is this entirely the fault of the big bad banks? It is certainly not and I suggest we all look no further than 10 and 11 Downing Street!
Dr John Fowler, Knaresborough, N Yorks

Clearly with the UK being an island and housing demand outstripping supply, prices will continue to rise. Thank goodness lenders are lending more otherwise how would people get on the housing ladder? If people are irresponsible and take on a debt they can't afford it is their problem. Do not punish people for exercising their right to purchase a house at a five-times-income. The banks will quickly stop lending if they are not making a profit. So let the market run itself and stop the red tape and regulation.
Richard, Malvern

The criteria for affordability now given by lenders is totally ridiculous. I'm buying my first house and am sticking to the 20% deposit and mortgage based on my single income. I'm not overstretching myself as I am leaving enough so that if rates go up by 10% (worst case scenario from the 80s), I can still make the repayments. I'm also second jobbing (as professional work doesn't pay overtime) and renting out a room to pay off as much as I can during the fixed period.
Dave, Notts

I face facts and believe that I have simply missed the boat
Simon, Preston
The over-inflated house prices and the extraordinary amounts to be borrowed just to get on the property ladder means myself staying put, renting the roof over my head. I live in a semi in a good area. I would struggle to be granted a mortgage to cover a terraced property in a poor area. I face facts and believe that I have simply missed the boat. I can't end up paying over a quarter of a million to own a terraced house, even if it is over 25 years.
Simon, Preston

May I say that Inheritance Tax is largely responsible for the high mortgage debt. In the past families passed on a house or its value to the next generation, avoiding their having to take out large mortgages. Today, many face the grotesque fact of having to take out a loan to pay the IT on an inherited property.
Bernard Keeffe, London

Lenders are in a cut throat market and they will lend maximum amounts to people as the loan is secured. They do not take personal expenditure of each individual into consideration. We need advertised campaigns to educate people so they can take responsible decisions, because this industry strives on our lack of knowledge on personal finance in general.
Dippy, Leicester

It will take very little for the current set of conditions to unravel
Steve
I've saved a big deposit to buy a house, but I would not part with any of it at current prices and will wait for the inevitable crash. The banks have irresponsibly legitimised debt of all types over the last few years and it is now accepted by the mainstream that taking on big debt to get what you want is a good thing, you can't lose. It will take very little for the current set of conditions to unravel and we will be back to mass repossessions and unemployment.
Steve

By offering first time buyers such risky mortgages, lenders have artificially delayed the drying up of first time buyers that heralds the beginning of a crash. All this greedy practice has done though is ensure that when the bubble does finally burst (as only a fool would deny it must) it will be a nasty crash rather than a slowdown.
Roy, London

Anyone buying a house now needs their heads looking at. Houses are way overpriced and are simply not worth getting tied down for the rest of your life with. Lenders are getting away with irresponsible practise but people are only too willing to borrow beyond their means! Madness. Only building societies, banks, estate agents and the government are making money out of this housing boom. Remember that!
Steve, Derby

I am hoping to borrow just so I can remain with my family in the city they have grown up in
Katie Maclean, Cambridge
Everyone deserves a home and probably one of the violent things about today's society is repossession and debt. It is convenient and easy to blame the borrower but with debt promising to grow out of all proportion (hasn't it already?) perhaps lenders too need to take a hefty share of the responsibility. Since Cambridge was featured recently as being one of the best places to invest in property the market has gone madder - where will it end? With a hefty amount to put down yet competing with the buy-to-let people I am hoping to borrow just so I can remain with my family in the city they have grown up in.
Katie Maclean, Cambridge

The increased availability of mortgage options just seems to be adding to the problem of overpriced housing. Five-times-salary; buy-with-friend(s); "deathbed" mortgages... plain ridiculous and just adding to the problem. What we really need is house prices to come down to normal levels, or at least a larger increase in interest rates to level out house prices.
Kong, Manchester

My bank is willing to lend my wife and myself way more than we can afford. We are first time buyers with a large deposit. I don't think they care about us, just how much money they can make from our stupidity.
Andy Lambert, Bristol

Our children will be in debt before they are born, having to pay off the mortgage we were unable to
Anthony Williams, Stockport
I think it is absolutely ridiculous that a mortgage company is prepared to now lend first time buyers five times their salary. As a first time buyer - now well into my 30s - I would find it hard enough to pay back three times my salary before I die. We entering an era where our children will be in debt before they are born, having to pay off the mortgage we were unable to pay off before we died.
Anthony Williams, Marple, Stockport

It would be worth buying if house prices were likely to continue their recent increases but with repossessions hitting new highs the signs are that people can't afford homes at their current level. I can't understand why anyone would buy now - the sums just don't make sense!
Adrian, Oxford

House prices have escalated to an unpredictable degree hence salaries have been pegged back by low inflation. Mortgage lenders have been very steady or even remained the same for lending multiples of income. Mortgage lenders should proportionally increase this for people to stay on the property ladder. Obviously mortgage lenders should encourage people to see if they can afford the mortgage. If they prove they can, then the income multiplier should be removed.
Owtar, Walsall

I don't understand the British public's obsession with house prices currently
R Griffiths, Cardiff
Too many people have over-borrowed and are now in real jeopardy in the near-term with global inflation and interest rates rising. House prices seem to have levelled off around most of the country, and renting is actually much cheaper (if you do the sums properly) over a five to 10 year period in most areas of the UK. I don't understand the British public's obsession with house prices currently. They are still approx 30% over-trend and will correct one way or another. Save your money for now and be happy.
R Griffiths, Cardiff

Never buy when it is cheaper to rent. There are far more important things in life than buying a house. Even if values increase you cannot take bricks to the supermarket! We are in the middle of a huge housing bubble in which Mr Brown and the lenders are flourishing - be aware, very aware.
John, Newtown

Any mortgage that has stretched borrowers to the limit financially has to be seen as irresponsible
Frank Sobey, Paignton
Bailiffs in the house, contents outside on the lawn, removal van with doors open, tearful humiliated family watched by distressed neighbours... It all seemed so easy when self-certification liberated the much needed money for the first house. Times were tough but both parents were working and all seemed well despite increasing credit card balances. But then suddenly credit was called in, the little rise in mortgage rate and a reduction in joint income resulted in the missing of mortgage repayments. Before very long the tide of debt became a current against which they couldn't swim and the house is repossessed. Any mortgage that has stretched borrowers to the limit financially has to be seen as irresponsible; unless of course you plan to gain from the unfortunates by benefiting from the proceeds of repossession.
Frank Sobey, Paignton

When only one salary was taken into consideration, and a deposit of 10-20% was required, houses could be bought by single income families. Since lenders started taking two incomes into account, families and couples tend to need two incomes. The more money that becomes available, the higher house prices will go, and the less affordable houses will become for a greater proportion of potential house buyers. As for lending 125% of house value, this only adds to the culture of debt which prevails. Why does a government, which unreasonably interferes in so many aspects of our life, stand by and allow this?
Joanna, Ascot


The comments we publish are not necessarily the views of the BBC but will reflect the balance of views we have received. It is helpful if contributors state if they work for any organisation relevant to an issue discussed. Readers should form their own views on whether messages published represent undeclared interests, or views prompted by a common source.



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