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Royal Bank of Scotland to curb mortgage lending


The Royal Bank of Scotland (RBS) has announced that it will be restricting mortgage lending from June 2014.

This will mean that mortgage applicants can only lend up to four times their annual income for loans of £500,000 or more.

They said the reasoning behind the move was to protect customers from taking on more than they can afford and to address inflationary pressure in London, where prices increased at an annual rate of 17%.

A spokesman for RBS said: “We are focused on looking after the interests of our customers and ensuring that they only take on mortgage lending that they can afford.”

The spokesman continued to make the point that the majority of mortgage applications will remain unaffected by the restrictions, especially outside the London area.

He said that only 2.6% of London mortgage applications will be affected, whilst only 0.5% of volume outside of London will be affected.

Curb rising house prices

The European Commission recently argued that the UK needs to do more to curb rising house prices to avoid the problems which caused the last housing slump.

They said the UK should raise taxes on higher value properties, build more houses to keep up with rising demand and re-evaluate the Help to Buy scheme.

They also singled out London house prices as being a particular problem due to the “rapid” increase in prices exhibited over the last 12 months.

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