Speaking at the Mortgage Next conference, Nigel Parker, corporate development manager at RBS Intermediary Partners, said wider spending patterns could one day be taken into account when calculating clients’ loan amounts.
He said: “It could be a natural progression because as property prices continue to go up, lenders will try to tailor-make solutions for each client. Why shouldn’t we think about taking lifestyle choices into affordability? If you smoke 20 cigarettes a day then that’s £35 a week and £140 a month. All these things add up.
“If someone is putting buying a house before everything else, why should they be judged along the same lines as someone who takes three or four continental holidays a year?”
However, Parker admitted such a process would be difficult to implement but believed it could be built into a lender’s systems in the future.
This sentiment was echoed by other lenders.
Peter Charles, group economist and head of market analytics at Bradford & Bingley, commented: “It’s a very interesting idea and on a broad level, you could argue that’s what credit scores are suppose to do in judging people’s behaviour. The industry will get better at helping those prepared to make sacrifices to afford a property but it is something which is currently not commercially viable.”
Tony Capon, head of intermediary sales at Salt, had concerns if people promised to change their lifestyle to get more money.
“There is some validity as asking some lifestyle questions could give better affordability guidelines but I’d be a bit nervous about lending to someone who said they’d give up smoking. The FSA favours affordability over income multiples and it’s a better way of assessing someone’s capability to service a loan. But I’d be wary about lending someone more on the promise of change because people rarely stick to them.”
