New Lending Figures Are Cause For Concern

5.14.06pm GMT Wed 21st Jan 2004

Vincent Cable MP, Liberal Democrat Shadow Chancellor

Figures from the Council of Mortgage Lenders show that mortgage lending grew 18% last year, income multiples rose to a new high of 2.91 and large scale re-mortgaging has taken place to finance consumer spending, with only 27% of mortgages being for first time buyers.

Vincent Cable MP, Liberal Democrat Shadow Chancellor, said: "These figures show the possibility of owner occupancy moving further out of low and average earners grasps."

"More worrying for those managing to buy homes is the plunge into ever higher levels of debt. If this housing bubble follows those of the last 30 years those with huge mortgages are in very real danger of finding themselves in negative equity."

"The reduction in those taking out fixed rate mortgages is further cause for concern as the upward trend in interest rates will increase the debt burden for those on variable rate mortgages. The sustainability of household debt depends initially on the optimistic belief that interest rates will remain low."