Haven’t you always proven you can service a debt ???
Can’t see how this is a bad thing. If people aren’t checking if they can afford a mortgage if/when the rates go up, it will lead to houses getting repossessed and banks losing out on money. No one wants any of that so checking people can afford it if it goes to 8-10% makes sense. So many people only check what they can afford now and not the future.
>Borrowers with TSB must prove they can afford mortgage rates of up to 8pc after the high street lender tightened its stress testing ahead of further interest rate rises.
>The bank has raised its affordability test rate for new home movers from 7pc to 8pc, while first-time buyers must now prove they could still afford their mortgage if rates rose to 7pc, up from a previous test of 6pc.
1%
This is going to be the gift that keeps giving for Labour, as people come to re-fix their mortgage over the next couple of years.
Personally costing the voters – *your* homeowning Tory voters – hundreds of pounds is the most courageous policy yet.
You know a Conservative government is screwed when The Telegraph starts complaining mortgage rates are too high.
Wait for the people saying “my mortgage was over 10% when I got it” but they forgot to mention that the average house price was much, much less.
I could afford the rates to go that high, but only because my career has progressed since buying my house. I wouldn’t be happy about it though.
If the rates go much higher, we’re going to see a lot of people not being able to afford their homes, house prices might fall but the same people who can’t afford a hose now, still won’t be able to because of the higher rates. Pretty much a lose lose situation for everyone.
The period since the banking crisis of 2008 has been one of abnormally low interest rates and inflation
This is live of the things that had driven unsustainable increases in house prices
A bank of England rate of around 5% is far more normal and a return to this is long overdue
Stress testing for a free percentage points over this should be no surprise and if this makes current housing prices unaffordable then great
Hopefully the next step is a rapid decline in prices in the overly inflated housing market back to something more justifiable
Holy crap I am so glad I fixed mine for 5 years at 2.8% a month or so ago.
Interest rates at the time were 10% and in the space of a day went up to 12% and then 15%.
That was the day my employer asked me to start looking for a new job as they were not sure the business could continue for any length of time.
We both survived, but it was scary as fuck and I have never since then not stress tested any loan.
I am old enough to remember when you could get loans with nearly zero financial checks.
Our first flat was bought with a 100% interest only mortgage and the only “proof” needed was a letter from our employers confirming our salaries.
That policy resulted in thousands of homes being in negative equity and many homeowners just handing their keys in to their lender and walking away, whilst still being responsible for any debts incurred after the sale by the lender.
Total misery for all concerned.
I am worried when my 5 year fixed rate ends in 2024
Yet another example where those who are able to rely on the bank of M&D will get on the ladder and those who can’t – will be given short shrift.
Tremendous.
As long as they cap rent increases at less than that… I’ll get my coat
Don’t mortgage lendors always stress test to see if you can afford repayment?
Is 8% a lot? Will more people be a mortgage prisoner?
In May 2021 Halifax stress-tested us up to 9.3%….why is this news?
Makes me feel so glad I was accepted for 4.01% last week for 5 years. Hoping it enough time for a new government to come in and start to get a handle on things.
Feel happy to have settled a 5 year 2% rate 6 months ago. Hopefully everything will have settled by the time I need to remortgage
I would dearly, dearly love it if my best career move at the moment wasn’t to sign on to some collections firm and start repossessing houses again.
The stress test is good for you. It’s a ballache, and sad if you don’t pass, but it’s better than having to deal with the like of me.
God damn, my monthly payment would jump to over £2700 from £1442 if it was 8%. Scary.
I’m sure that when I last remortgaged, my income was “stress tested” against that exact benchmark anyway.
So long as this isn’t another 8% on top of the 8%, I don’t really see a huge difference compared to the rules since the 2008 crash.
Unfortunately, we’re in financially difficult times. Responsible lending involves checking that the person taking out the loan can afford the repayments.
Frankly, I’d rather not have my own home, than have it taken off me a few years later for failing to pay the mortgage.
Also – willing to be corrected, but I believe that the fact that we can currently borrow up to 4.5 times our salary to buy a house was a function of the low interest rates.
If the interest rates stay as they are / increase further, I can see that dropping back down to the 3x multiplier that it used to be.
22 comments
Un-paywalled link:
https://12ft.io/proxy?q=https%3A%2F%2Fwww.telegraph.co.uk%2Fpersonal-banking%2Fmortgages%2Fhomeowners-forced-prove-can-afford-8pc-mortgage-rates%2F
Haven’t you always proven you can service a debt ???
Can’t see how this is a bad thing. If people aren’t checking if they can afford a mortgage if/when the rates go up, it will lead to houses getting repossessed and banks losing out on money. No one wants any of that so checking people can afford it if it goes to 8-10% makes sense. So many people only check what they can afford now and not the future.
>Borrowers with TSB must prove they can afford mortgage rates of up to 8pc after the high street lender tightened its stress testing ahead of further interest rate rises.
>The bank has raised its affordability test rate for new home movers from 7pc to 8pc, while first-time buyers must now prove they could still afford their mortgage if rates rose to 7pc, up from a previous test of 6pc.
1%
This is going to be the gift that keeps giving for Labour, as people come to re-fix their mortgage over the next couple of years.
Personally costing the voters – *your* homeowning Tory voters – hundreds of pounds is the most courageous policy yet.
You know a Conservative government is screwed when The Telegraph starts complaining mortgage rates are too high.
Wait for the people saying “my mortgage was over 10% when I got it” but they forgot to mention that the average house price was much, much less.
I could afford the rates to go that high, but only because my career has progressed since buying my house. I wouldn’t be happy about it though.
If the rates go much higher, we’re going to see a lot of people not being able to afford their homes, house prices might fall but the same people who can’t afford a hose now, still won’t be able to because of the higher rates. Pretty much a lose lose situation for everyone.
The period since the banking crisis of 2008 has been one of abnormally low interest rates and inflation
This is live of the things that had driven unsustainable increases in house prices
A bank of England rate of around 5% is far more normal and a return to this is long overdue
Stress testing for a free percentage points over this should be no surprise and if this makes current housing prices unaffordable then great
Hopefully the next step is a rapid decline in prices in the overly inflated housing market back to something more justifiable
Holy crap I am so glad I fixed mine for 5 years at 2.8% a month or so ago.
Let me introduce you to:
[Black Wednesday](https://www.mortgagestrategy.co.uk/opinion/blog-parallels-with-the-30th-anniversary-of-black-wednesday/)
Interest rates at the time were 10% and in the space of a day went up to 12% and then 15%.
That was the day my employer asked me to start looking for a new job as they were not sure the business could continue for any length of time.
We both survived, but it was scary as fuck and I have never since then not stress tested any loan.
I am old enough to remember when you could get loans with nearly zero financial checks.
Our first flat was bought with a 100% interest only mortgage and the only “proof” needed was a letter from our employers confirming our salaries.
That policy resulted in thousands of homes being in negative equity and many homeowners just handing their keys in to their lender and walking away, whilst still being responsible for any debts incurred after the sale by the lender.
Total misery for all concerned.
I am worried when my 5 year fixed rate ends in 2024
Yet another example where those who are able to rely on the bank of M&D will get on the ladder and those who can’t – will be given short shrift.
Tremendous.
As long as they cap rent increases at less than that… I’ll get my coat
Don’t mortgage lendors always stress test to see if you can afford repayment?
Is 8% a lot? Will more people be a mortgage prisoner?
In May 2021 Halifax stress-tested us up to 9.3%….why is this news?
Makes me feel so glad I was accepted for 4.01% last week for 5 years. Hoping it enough time for a new government to come in and start to get a handle on things.
Feel happy to have settled a 5 year 2% rate 6 months ago. Hopefully everything will have settled by the time I need to remortgage
I would dearly, dearly love it if my best career move at the moment wasn’t to sign on to some collections firm and start repossessing houses again.
The stress test is good for you. It’s a ballache, and sad if you don’t pass, but it’s better than having to deal with the like of me.
God damn, my monthly payment would jump to over £2700 from £1442 if it was 8%. Scary.
I’m sure that when I last remortgaged, my income was “stress tested” against that exact benchmark anyway.
So long as this isn’t another 8% on top of the 8%, I don’t really see a huge difference compared to the rules since the 2008 crash.
Unfortunately, we’re in financially difficult times. Responsible lending involves checking that the person taking out the loan can afford the repayments.
Frankly, I’d rather not have my own home, than have it taken off me a few years later for failing to pay the mortgage.
Also – willing to be corrected, but I believe that the fact that we can currently borrow up to 4.5 times our salary to buy a house was a function of the low interest rates.
If the interest rates stay as they are / increase further, I can see that dropping back down to the 3x multiplier that it used to be.