Mortgage borrowing to be capped

In yet another, let’s close the stable door after the horse has bolted move, something we Brits seem expert at doing, the UK Financial Services Authority (FSA) is this week due to announce that aspiring property owners will no longer be able to borrow more than three times their salary for house purchases.

While I welcome this development, a move back to sustainable and responsible lending, I can imagine that many home owners currently sitting in a house worth a lot less than their mortgage will be disheartened. The implication for these negative equity borrowers is that the heady property excesses of the past are unlikely to be repeated anytime soon.

Of course, from a cynical financial services marketers perspective this may encourage investors to diversify their investment and saving strategy. If investing in property is unlikely to be as lucrative as it has been in the past, alternative investment avenues will be likely pursued. – At least until some investment banker finds a way to circumvent these new rules…

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