Last month, the Bank of England announced their plans to abolish the stress tests associated with mortgage rates in a bid to improve affordability.
At the moment, mortgage stress tests are set at 3%. This means that borrowers must still be able to afford their mortgage repayments should their rate increase to 3% above the lender’s standard variable rate (SVR).
Lenders are already taking into account the rising costs of living when considering who they can lend to, and the Financial Conduct Authority are keen to retain a 1% stress test to accommodate rising rates, however the relaxation of these tests could help would-be buyers who have been refused mortgages that have lower repayments than the sum they pay in rent each month. A consultation by the Bank found that in order to qualify for home loans people were taking mortgages over longer terms, or on longer-term fixed-rates, which meant paying more overall.
Ultimately the changes will allow lenders to treat cases on a more bespoke basis, judging affordability against real time affordability and encompassing some flexibility around stress testing. This is especially good news for first-time buyers but could also pass on benefits for those looking to remortgage or alter their home ownership status.
If you’re not sure how the stress testing will affect you and your mortgage, please get in touch for a no-obligation conversation.
Related News
Funds To Help The Cost Of Living
While the cost-of-living crisis rages on, many of us are looking at ways we can tighten our belts, even with that new measures being put in place by Liz Truss earlier this month.
6 Reasons You Need Life Insurance
If you’re looking into Life Insurance but are still on the fence whether to go ahead, check out these 6 key reasons why you might consider securing the cover for yourself and your family.
Review Your Outgoings And Save Money
It is surprising the money you can save if you review and replace your current financial obligations. Spend a day reviewing your current outgoings and shop around or speak to a financial adviser like ourselves to see if we can help you obtain comprehensive but more cost-effective cover- (it can take some time but can be worth it in the savings you could make!)
Bills What To Do If You Are Struggling
Many of us could still be struggling with that upsurge in costs so what can you do if they’re just unmanageable? Check out our top ten tips on what to do if you’re struggling to afford your energy bills.
Make your Lenders Want You!
We’ve assembled a few top tips to help give you real curb appeal when it comes to presenting your application to the lender.
Claim Tax For Working From Home?
You may be able to claim tax relief for additional household costs if you have to work at home for all or part of the week.
Property At Risk Of Floods?
the long periods of dry weather followed by a period of rainfall can cause flooding and when it comes to the significant increase in rainfall during the winter months flooding can be even more prevalent causing significant property damage.
Using Equity Release To Gift Funds
Recent research conducted by Later Life Lender more2life, revealed the true extent to which gifting via Equity Release can benefit fund recipients.
The Current Climate And Credit Score
As we continue to battle the cost-of-living crisis, it’s easy to see the solutions damaging our credit file, impacting our future finances as well as hitting us in the pocket today.
3 Considerations About Medical Insurance
Even with private health insurance, you'll still use the NHS for services such as your GP or A&E. Equally, if you get a serious illness, you won't necessarily receive treatment more quickly by being covered by a health insurance policy than you would under the NHS.