Is Cable pre-historic?

Should we go back to limiting home buyers to borrowing 3 to 3.5 times their income, as Vince Cable suggested on BBC Radio this morning?

It's what he calls a "stable level" compared with the multiples of 5 times which some borrowers have been getting.

Here are some responses from the mortgage industry to show you the other side of the argument:

*"You would disappoint around half of first time buyers" because the average income multiple for first timers is 3.42 at the moment, so large numbers are having to borrow more than that.

*"He's pre-historic" because he's harking back to a time (in the late 1980s, early 1990s) when people had to budget for zig-zagging interest rates which could be 15%. You  don't have to do that now, although lenders are stress-testing household income for a jump to 7% rates.

*"It's nonsense", because the regulator, the FCA, has forced lenders to move away from strict income multiples, to detailed affordability checks. For some 5 times income is affordable, for others 3 times income is unaffordable.

*Cable doesn't appreciate that the market in London has already gone "off the boil".

Strong interest in Help to Buy

The Halifax says it is receiving 500 applications per week from house buyers seeking assistance under the Help to Buy scheme.

The Help to Buy mortgage guarantee was launched 4 months ago for buyers who have trouble raising a big enough deposit.

Critics are concerned that the scheme will help create a housing bubble, particularly in London and the South East of England where prices have risen fastest.

However, the Halifax says that so far, 8 out of ten applications have been from other areas, and 80 per cent are from first time buyers.

The average house price under the scheme is £157,000, which is less than the typical UK price.

In December the Business Secretary, Vince Cable, described a "raging housing boom" in London and said ministers needed to look again at the Help to Buy scheme.

The Halifax reports interest in the scheme is still strong and it has completed 1,000 loans.

£millions for sole traders

Thousands of sole traders could benefit from a new initiative to allow savers to offer them loans directly via an internet website.

The business secretary, Vince Cable, is expected to announce today that he will invest £10 million in the online savings and loans firm, zopa.com, to help it launch a service builders, decorators, and other small businesses which aren't limited companies.

"There are 3 million sole traders and they find it really difficult to borrow money," says Giles Andrews, one of Zopa’s founders, "No one specialises in them."

Traders will be able to raise thousands of pounds to pay for vehicles and equipment, at a time when bank funding is hard to come by.

Zopa is a new peer-to-peer lender, which enables savers to offer their money directly to borrowers over the internet.

They earn more than they would expect to get from a bank or building society, though without the absolute guarantee that their money will be returned.

The firm has concentrated on consumer borrowers so far but will launch the sole trader service in the New Year.

Vince Cable is also likely to put £20 million of taxpayers’ money into another peer-to-peer lender, Funding Circle, which specialises in limited companies. Other providers of alternative finance will benefit as well.

Giles Andrews expects to offer loans of between £1,000 and £15,000 at slightly higher rates than his best borrowers enjoy, because of the higher level of risk.

He will match the government money pound for pound with cash from savers. All the state funding will be paid back after two years.

The growth of peer-to-peer lending has been impressive. Zopa is on course to lend £90 million this year and hopes to get close to £200 million of loans in 2013.

On the face of it the model is risky for savers, but their money is spread between hundreds of borrowers to reduce the chance of making significant losses.

Jacob Rothschild, from the well known banking dynasty, revealed in the last few days that he had bought a stake in Zopa, saying "alternative forms of credit will be developed on a significant scale".

Lord Rothschild wouldn't reveal the size of the investment.