News this week that the Royal Bank of Scotland has become the second UK lender to cap large mortgage loans, concerned that the London property market is overheating.
Following the move by Lloyds Banking Group last month, RBS is restricting customers to a maximum of four times their income on loans of £500,000 or more.
This is designed to be an extra safeguard on top of the affordability checks it already has in place.
On top of this, it is capping loan terms at a maximum of 30 years on large sums in order to prevent borrowers taking on more debt by spreading repayments over longer periods.
Alongside the decision by these two state-backed lenders, the Bank of England is also considering tightening controls on risky mortgage lending.
Governor Mark Carney has singled out the housing market as “biggest threat to Britain’s economic recovery”, and the European Commission has also said the government should think about reining in the Help to Buy scheme.
It’s vital that we work to ensure our financial industry works to protect borrowers, and that it recognises when it needs to bring in more stringent checks.
If this doesn’t happen, it will simply lead to situations where borrowers will be unable to make repayments, and faced with mounting debt.
Our Payment Waiver, which is already live with Credit Unions across the UK, kicks in when borrowers face an unexpected period of loss of income. A business-to-business deal, the lender takes out the insurance and this comes at no extra cost to the borrower.
We want to ensure that borrowers are protected at all times, and feel as though they have a safety net to fall back on.