The Bank of England have said as of August 1, 2022 there will be no need for Lenders to stress test when assessing borrowers mortgage affordability.
What is ‘Stress Testing’?
Stress Testing is a rule where Lenders have to apply a 3% interest rate to their standard variable rate for potential borrowers when working out affordability.
This means as of August 1st we should see some Lenders increase their affordability.
This will come as a major boost to First Time Buyers and borrowers on lower incomes. However there is no guarantee a Lender will improve their affordability criteria. It’s a case of wait and see how this affects the market as the months go on.
For now, we can take this as a step forward to helping more people get on the property ladder.