Mortgage blow for families with children

Families with children are being given smaller mortgages than couples without, as banks and building societies tighten their lending criteria.

Many lenders will advance families 10 per cent less than they would to childless couples, while in some cases the difference can be nearly 20 per cent. The change in lending policy has been brought about by lenders switching from assessing how much they will advance in terms of multiples of people's income, to applying affordability tests to decide how much borrowers can afford to repay each month.

But the stance is being exacerbated by the Financial Services Authority's controversial Mortgage Market Review, under which a far greater emphasis is being put on lenders to ensure that borrowers can afford their repayments, particularly if interest rates rise.