Scots finance guru blasts Abbey lending

Published on Thursday 2 November 2006 12:47

SCOTTISH financial guru Jim Spowart has blasted Spanish-owned bank Abbey's decision to lend house hunters up to five times their salary to buy homes.

The brains behind both Intelligent Finance and Standard Life Bank said the move was "irresponsible and potentially damaging" and called for "some sense" to prevail.

Abbey is the latest bank to offer such a salary multiple, joining Scottish Widows Bank and the Cheltenham & Gloucester, which offers to lend 5.5 times a single or joint salary - well above the standard 3.5-four times income. The move is in response to the relentless rise of house prices, but some experts believe such large loans could lead borrowers into repayment difficulties, especially as interest rates are expected to edge upwards in the next few months.

Mr Spowart, who is the chairman of comparison website group PeoplesChampion.com, said: "If you look at the headline, this is simply irresponsible lending - in that it raises people's hopes. Mortgage companies, such as Abbey, have a duty of care to offer what people can afford.

"This kind of open-ended offer gives the UK customer false hope . . .Let's have some sense here."

Recent research that showed 17.3 million British adults were unable to get on the property ladder, with 7.4 million people citing house prices as one of the main reasons.