The topic of mortgage products and banking services has increasingly appeared in IELTS Writing Task 2 exams, particularly in questions about economics and financial policies. Based on analysis of past exams from 2019-2023, questions related to banking services and mortgage options have appeared in approximately 12% of tests, making it a significant topic for preparation.
Understanding different mortgage products and banking services comparison
Let’s examine a recent IELTS Writing Task 2 question on this topic:
Some people believe that banks should design mortgage products primarily based on customers’ income and ability to repay. Others argue that banks should consider additional factors like market conditions and economic stability. Discuss both views and give your opinion.
Analysis of the Question
- Topic: Banking and mortgage product design
- Task: Discussion + Opinion
- Key points to address:
- Income-based approach
- Market-based approach
- Personal viewpoint with justification
Sample Essay 1 (Band 8.5)
In the banking sector, there is ongoing debate about the primary factors that should influence mortgage product design. While some advocate for a strictly income-based approach, others support a more comprehensive evaluation including market dynamics. I believe that while income assessment is crucial, a balanced consideration of multiple factors leads to more sustainable lending practices.
Those who emphasize income-based assessment argue that it provides the most reliable indicator of loan repayment capability. For instance, traditional benefits of fixed-rate mortgage loans are most effectively allocated when based on stable income verification. This approach minimizes default risks and ensures borrowers don’t overextend themselves financially. Additionally, focusing on income creates a straightforward, transparent evaluation process that customers can easily understand.
However, proponents of market-based considerations present compelling arguments. Economic conditions, property market trends, and interest rate fluctuations significantly impact loan sustainability. For example, the 2008 financial crisis demonstrated how how peer-to-peer lending disrupts traditional banking and why market analysis is crucial for long-term stability. Banks must consider these broader factors to protect both themselves and their customers from market volatility.
In my opinion, the most effective approach combines both perspectives. While income assessment should remain the foundation of mortgage product design, banks must integrate market analysis to create truly sustainable products. This balanced methodology enables financial institutions to offer appropriate products while maintaining system-wide stability.
Professional banking staff reviewing mortgage applications with clients
Sample Essay 2 (Band 6.5)
There are different opinions about how banks should design their mortgage products. Some people think income is the most important thing to look at, while others believe banks should look at more things. I will discuss both sides and give my opinion.
First, looking at customer income is important because it shows if people can pay back their loans. When banks check income, they can know if customers have enough money every month to pay their mortgage. This is good because it stops people from borrowing too much money and getting into trouble. Also, it is easier for customers to understand if banks just look at their income.
However, other people think banks should look at more things like the economy and house prices. This is because these things can change and affect how well people can pay their loans. For example, if house prices go down a lot, it can cause problems even for people with good income. Also, if interest rates change, it can make loans more expensive.
I think banks should look at both income and other factors when they make mortgage products. This is because both things are important for making sure loans are safe. Banks need to check income first, but they should also think about other things that might affect the loan in the future.
Analysis of Band Scores
Band 8.5 Essay Features:
- Sophisticated vocabulary: “sustainable lending practices,” “market dynamics”
- Complex sentence structures
- Clear progression of ideas
- Strong cohesion and coherence
- Balanced argument with nuanced opinion
Band 6.5 Essay Features:
- Simple but clear vocabulary
- Basic sentence structures
- Some repetition
- Adequate organization
- Simple but logical arguments
Key Vocabulary
- mortgage product (n) /ˈmɔːɡɪdʒ ˈprɒdʌkt/ – a type of loan for buying property
- lending practices (n) /ˈlendɪŋ ˈpræktɪsɪz/ – methods used by banks to give loans
- market volatility (n) /ˈmɑːkɪt ˌvɒləˈtɪləti/ – rapid changes in market conditions
- assessment criteria (n) /əˈsesmənt kraɪˈtɪəriə/ – standards used for evaluation
- sustainable (adj) /səˈsteɪnəbl/ – able to be maintained long-term
Consider practicing with these similar topics:
- The role of technology in modern banking services
- Comparing traditional and online banking systems
- The impact of interest rates on household borrowing
Feel free to share your practice essays in the comments section for feedback and discussion.
