Irresponsible Lending Fuelling Housing Market - Cable

1.04.57pm GMT Wed 1st Nov 2006

Responding to the announcement that Abbey will now be prepared to lend five times either single or joint salary for mortgages, Liberal Democrat Shadow Chancellor, Vince Cable MP said: "This announcement is very alarming. The risk is that more and more people will become overstretched.

"With interest rates, unemployment, and council tax all rising it is likely that these irresponsible lending practices will lead to financial disaster for many people.

"While the banks may claim they are trying to help first time buyers, in reality it will only stoke the housing market further, putting the dream of home ownership out of reach for many more people.

"A more active role is required for the Bank of England in asset markets, and serious thought must be given to including house prices in the official measure of inflation."

ENDS

Notes to Editors

In addition to Abbey's announcement, Scottish Widows are also offering to lend 5 times a single or joint salary and the Cheltenham & Gloucester are offering to lend 5.5 times a single or joint salary.