First-time buyers and buy-to-let landlords to face tougher mortgages
Plans from the Financial Services Authority (FSA) could see borrowing becoming much tougher in future.
The watchdog today unveiled new controls on lenders with the upshot being borrowers facing more hoops to jump through.
A major change - already taking place - is for lenders to look at affordability.
The FSA, however, is set to impose maximum loan to income or loan to value ratios.
These means lenders will be looking more at borrowers' disposable income.
Paul Broadhead, head of mortgage policy at the Building Societies Association (BSA), explained changes could make it harder for first-time buyers.
"The vast majority of the British population aspire to home ownership and these proposals must not frustrate the sensible ambitions of potential homeowners," he said.
John Luke Busby of Athena Mortgages, which specialises in French mortgages, says the changes seem to match how mortgages are lent in France.
French banks, although flexible, are only willing to let borrowers spend 33 per cent of your gross income on servicing all their borrowings.
However, high loan-to-value mortgages are available.
"It will be quite a culture change in the UK," Mr Busby said.
He explained in the French model customers have a greater relationship with their bank and lending looks more at their ability to cover a debt. As a result buyers have to have greater deposits behind them.
"The biggest change will affect buy-to-let borrowers," Mr Busby said.
"In the UK landlords could put 15 per cent deposits down and just work off rents to cover repayments - not looking at the income situation."
He added the changes could make it much more difficult for some buy-to-let landlords in the UK.
Stephen Foden, chief executive of propertydatingagency.com, said there was danger lenders may just shut the stable doors.
"The fear is that this will give cautious mortgage lenders an excuse to become even more cautious.
"The excesses of the mortgage market should be stopped and the FSA's plans are an entirely sensible way of tackling the old excesses.
"It is difficult though to claim that there is much evidence of excessive lending or borrowing in the past year."
However, Mr Busby explained more conservative lending could result in long-term heath for the property market.
"The French banks have carried out affordability tests for all types of borrowing, whether buy-to-let or owner-occupier, for years and if you look at historical house price trends in France there is a far more gentle variation in prices as opposed to the booms and busts seen in the UK," he said.
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