By Banks are restricting the most generous mortgages to wealthy homeowners and shunning cash-strapped first-time buyers, a report by the City watchdog has said.
New rules were introduced in 2014 which capped the number of mortgages that banks could offer to customers borrowing more than 4.5 times their income.
It stated that just 15 per cent of borrowers should be allowed to take out loans above this level, designed to prevent banks returning to the poor practices seen before the financial crisis.
However, the Bank of England restrictions have punished first-time buyers and others on middle incomes who are trying to buy homes in expensive locations, a report published by the Financial Conduct Authority (FCA), which is responsible for implementing the rules, has said.
These customers typically need to borrow greater sums of money in order to afford a property.
Last night, experts called for the cap on lending to be scrapped to help firsttime buyers. Ray Boulger of John Charcol, a mortgage broker, said: "The 15 per cent rule should go completely. The Government is trying to help firsttime buyers, but if they want to assist then these people need it most."
In the most popular towns and cities, even those on above-average salaries find it difficult to find homes that cost less than 4.5 times their income.
Instead, banks have concentrated on attracting high-earning customers. The salary required to take out high loan-to-income mortgages has risen from £41,951 to £48,953 – well above the national average wage of £30,420
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