Yes, it worked out great last time. Let’s careen towards a repeat of 2008 …
Got to stave off that collapse in house prices somehow now we don’t have all that Russian money coming in.
With inflation on the up and the inevitable interest rate hike following after this is not the time to try and throw more people into debt. Are financiers wanting to make bigger profits from bad mortgage debt like they did before 2008. I doubt this is about helping anyone other than them.
TBF when we did our mortgage they wanted to see we could afford at 13%
I was like ‘mate, if we get to 13% the whole country will be repossessed’
“Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said the affordability tests have “seemed increasingly draconian over time, because they refer to reversion rates – the mortgage rate you’re moved to at the end of your deal – and insist you should still be able to afford your mortgage if your rate rose to three percentage points above your reversion rate”.“Despite mortgage rates dropping dramatically in recent years, reversion rates have remained remarkably sticky, so in order to qualify for a cheap mortgage, buyers need to prove they can afford a really expensive one.””
So a better headline might be “Bank considers changing the rate used for affordability tests to more accurately reflect the rate people actually pay if they agree a mortgage deal every 3-5 years, rather than going onto the standard variable rate.”
Good – the test was always a sledgehammer to crack a nut, trapping many people in unaffordable mortgages and causing untold distress.
By all means keep it in place for Buy To Let’s, but otherwise banks should be free to use their own judgement on the matter.
And before anyone jumps in with “Ooh 2007 again!” – banks in the UK didn’t collapse because of bad mortgages on residential homes.
You’re meant to wait a generation before forgetting the lessons from the last crisis. It’s been what 13 years?
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> withdraw the affordability test
Yes, it worked out great last time. Let’s careen towards a repeat of 2008 …
Got to stave off that collapse in house prices somehow now we don’t have all that Russian money coming in.
With inflation on the up and the inevitable interest rate hike following after this is not the time to try and throw more people into debt. Are financiers wanting to make bigger profits from bad mortgage debt like they did before 2008. I doubt this is about helping anyone other than them.
TBF when we did our mortgage they wanted to see we could afford at 13%
I was like ‘mate, if we get to 13% the whole country will be repossessed’
“Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said the affordability tests have “seemed increasingly draconian over time, because they refer to reversion rates – the mortgage rate you’re moved to at the end of your deal – and insist you should still be able to afford your mortgage if your rate rose to three percentage points above your reversion rate”.“Despite mortgage rates dropping dramatically in recent years, reversion rates have remained remarkably sticky, so in order to qualify for a cheap mortgage, buyers need to prove they can afford a really expensive one.””
So a better headline might be “Bank considers changing the rate used for affordability tests to more accurately reflect the rate people actually pay if they agree a mortgage deal every 3-5 years, rather than going onto the standard variable rate.”
Good – the test was always a sledgehammer to crack a nut, trapping many people in unaffordable mortgages and causing untold distress.
By all means keep it in place for Buy To Let’s, but otherwise banks should be free to use their own judgement on the matter.
And before anyone jumps in with “Ooh 2007 again!” – banks in the UK didn’t collapse because of bad mortgages on residential homes.
You’re meant to wait a generation before forgetting the lessons from the last crisis. It’s been what 13 years?