With costs of living rising and inflation at a 40-year high in the UK, thousands of people are struggling to save enough for a deposit for a mortgage. The good news is the Bank of England has introduced a major change for prospective homeowners that came into effect last month.
The Bank of England has scrapped a key mortgage affordability test first introduced after the 2008 financial crisis. The stress test required lenders to assess whether home buyers would be able to repay their mortgage if the interest rate increased by 3% on top of their standard variable rate. The rule was originally put in place to protect lenders by ensuring borrowers didn’t take on debt they could not repay.
From Monday 1st of August, the Bank of England has removed this additional stress test which could lead to prospective buyers being able to take out a bigger mortgage. However, there are still key protection measures in place to ensure that borrowers don’t take on loans they might not be able to afford.
Interested to see if this will impact you?
Our Property Investment Consultant Amy Collins spoke to Marian Dzhenkov of Capricorn Financial, one of our trusted mortgage partners, regarding the new change to mortgage rules and the current mortgage market.
Marian shares with us his insight on:
- The current mortgage market
- What is the new mortgage rule change?
- Will this impact buy to let mortgages?
- Will this impact first-time buyers?
- Are there any risks associated with this new mortgage rule?
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