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Has the UK mortgage sector forgotten the lessons of last year?

Despite the fact that a great majority of UK homebuyers are unable to remortgage their properties and many first-time buyers have effectively been blocked from the market, a report by the housing charity Shelter has confirmed that some banks in the UK are still offering mortgages up to 5.5 times salary. One "prospective client" was offered a mortgage of £153,000 despite the fact that he was only earning £28,000 a year.

While this is at the top end of the table, and a mortgage offer by Alliance & Leicester, it is still possible to arrange mortgages at over four times income from the likes of Lloyds bank, Yorkshire bank, Cheltenham Gloucester, NatWest, Royal Bank of Scotland, Direct Line, CMG brokers and the Woolwich. At a time when liquidity in general is very low in the UK mortgage market it seems rather absurd that the likes of Alliance & Leicester are even considering mortgages of 5.5 times income and it would appear that the lessons of yesteryear have not been learned.

The UK government will be dismayed to see these figures which effectively indicate a two tier market in the UK mortgage industry with first-time buyers and those with low deposits effectively cut out while those who are able to place down larger deposits appear to be well catered for.

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