Mortgage cap unnecessary, says local lender
A CAP on mortgage lending to control house prices is unnecessary and could put further strain on those trying to get on the housing market, the largest lender in Guernsey has said.
Skipton International commented yesterday after Bank of England Governor Mark Carney raised the prospect of would-be homebuyers being stopped from taking out mortgages that were more than four-and-a-half-times their salary – £135,000 for an islander on £30,000 a year, the median average in 2013.
Unlike the Bank of England, Skipton International uses affordability measures to determine whether an applicant can repay the mortgage they are applying for, rather than basing it upon multiples of a person's salary.
The offshore bank's managing director, Jim Coupe, was opposed to a cap. 'Skipton has very few cases in arrears. Generally, they are the result of the impact of a life-changing event on our customer where we look to understand the customer's circumstances to examine options to assist,' he said, adding it had never repossessed a property in Guernsey.
'Given this history of prudent, effective lending, Skipton does not consider a cap necessary and, indeed, considers it could result in the unintended consequence of further applicants being subsequently declined.'
