Liquid error: wrong number of arguments (2 for 1) Mortgages limited to four times salary | Marsh & Parsons Sales and Lettings Estate Agents London

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Mortgages limited to four times salary

Tue 20 May 2014

London. The prime minister admitted yesterday that he was ready to change the controversial Help to Buy scheme, which assists buyers with small deposits. "It is absolutely right that we are alert to any dangers and problems," David Cameron told BBC Radio 4. "We will consider any changes that are proposed by Mark Carney."

Lloyds, which is still 25 percent owned by taxpayers, described its unusual step as a targeted policy to address inflationary pressures in the London market. House prices in the capital have soared by 17 percent in the past year and are now 30 percent about their 2007 peak.

Steven Noakes, director of mortgages at Lloyds, said: "This is a targeted response to an issue largely in the upper tiers of the London housing market." He added it was important Lloyds didn't disrupt the recovery in the rest of the housing market which was fragile, with prices still below their 2007 peak.

Ray Boulger, a mortgage expert with John Charcol, said: "Either Lloyds thinks London prices are a bit toppy or more likely, this is a pre-emptive strike." He expected other mortgage assessment rules as a result of the move by Lloyds, adding that they would be hoping that this could see off a more radical intervention by regulators.

The move came amid signs that the overall housing market may be starting to cool, with prices falling in March for the first time in more than a year, according to the Office for National Statistics. Prices fell 0.5 percent between February and March, the first decline since February last year and the largest fall since January last year.

Economists and property experts said that the market might have been responding to new standards on housing affordabilitym which came into force on April 26. There was little sign of London prices deflating, however. Prices in the capital were 17 percent higher than last year. Excluding London and the southeast, prices were 4.7 percent ahead of March 2013, a dip frpm 5.8 percent the previous month. Lenders must now test households against a possible future rise in interest rates to ensure that they can afford to repay their debt, rather than just gambling on rising prices to rescue them.

Borrowers are questioned by mortgage advisers about their spending habits, from meals out to haircuts. Peter Rollings, chief executive of the estate agent Marsh and Parsons, said: "Price rises are steadying now thanks to a resurgence of supply and the recent mortgage market review tightening affordability criteria. The first signs of cooling are evident."

Separately, rising travel costs put a squeeze on household bills and pushed up the headline consumer prices index of inflation by more than expected to 1.8 percent from 1.6 percent in March. The cost of food rose at its slowest pace in eighty years in April as the supermarket price war paid off for shoppers. Tesco, Sainsburys and Morrisons have been slashing prices as they battle for customers against the German discounters Aldi and Lidl.

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