Graduate mortgage lenders run risk, IFA says

Those lenders who allow recent graduates to take out mortgages with them do so at their own risk, Balmoral Associates said today.

The independent financial advisor said that the mortgages, which typically lend at five to six times salary under the assumption that wages will increase over the years, were not “very common”.

Director at Balmoral Associates Paul Monk also took care to distinguish them from 100 and 110 per cent mortgages, saying that the graduate loans were aimed at those who had read a “professional course like medicine or law” and whose “salary is going to increase dramatically over a short space of time”.

Given that a proportion of graduates will remain on similar wages after some years, however, Mr Monk added that “the lender’s taking a big risk” in offering the service.

“The lender’s banking on the fact that because of the sort of job you’re in that that is automatically going to happen but it’s not always the case,” he added.

Mr Monk also commented on the recent US sub-prime mortgage crisis, saying that the UK market might “tighten up” on lending, with recent graduates among the first to feel the squeeze.

Tags: medicine, United Kingdom, law, recent graduates, salary, market, time, service."The lender banking