Lenders have been encouraged to restrict the number of mortgages they issue with high LTI ratios following concerns over excessive and unsustainable borrowing for consumers. How has this affected allocation of mortgages and their prices?
Summary
Recovery of the UK housing market has been linked to a rise in the share of mortgages extended at high loan to income (LTI) ratios. Leveraging household debt to unsustainable levels risks an increase in defaults on those loans and higher risk of economic instability.
FPC recommendations that lenders do not overextend on their lending at high LTI ratios has seen a change in lending patterns in the market.
We look at the research identifying how the recommendation has effected allocation of high LTI mortgages across consumers and mortgage prices.
Adiya Belgibayeva.
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