Mortgage lenders to scrap affordability checks.
Discussion
Wow!!!
Thoughts on this?
I know banks holding a lot of cash right now. Need to keep it moving is my guess.
https://www.theguardian.com/business/2022/jun/20/u...
Thoughts on this?
I know banks holding a lot of cash right now. Need to keep it moving is my guess.
https://www.theguardian.com/business/2022/jun/20/u...
BofE tells banks to take more risks.
BofE tells banks they’re not TBTF any more.
https://www.thetimes.co.uk/article/bank-of-england...
Double speak?
Or are banks going to be the patsy for the/a looming housing crash…?
BofE tells banks they’re not TBTF any more.
https://www.thetimes.co.uk/article/bank-of-england...
Double speak?
Or are banks going to be the patsy for the/a looming housing crash…?
BofE/UK Gov said:
Oh it was the nasty banks, we said they can lend but they didn’t want to
It’s this whole confidence thing again. The wheels are about to come off.
The problem with "affordability" testing has been that the tests don't make any sense. They're far too rigid and derive from a mandated tick box approach. Lots of people are being turned down from mortgages they can easily afford. In this regard relaxing the rules makes a great deal of sense.
Whether banks will be able to break with tradition and behave in a sensible fashion is another question entirely.
Whether banks will be able to break with tradition and behave in a sensible fashion is another question entirely.
Panamax said:
The problem with "affordability" testing has been that the tests don't make any sense. They're far too rigid and derive from a mandated tick box approach. Lots of people are being turned down from mortgages they can easily afford. In this regard relaxing the rules makes a great deal of sense.
Whether banks will be able to break with tradition and behave in a sensible fashion is another question entirely.
I was considering an IO from Coventry. Some sensible hoops like no consolidation, max 50% ltv and min £300k equity ... but affordability is assessed the same as for a repayment product.Whether banks will be able to break with tradition and behave in a sensible fashion is another question entirely.
Edited by richardxjr on Tuesday 21st June 13:18
okgo said:
I see you can get 5.5x salary too if you earn enough, could be some lumpy mortgages coming out soon before the rates get too out of hand...
I have actually heard from a broker that apparently it can go worst than that, even 6 or 7 times. when I asked how is that even possible he said that they look at the persons career, so if they are a doctor or surgeon they know they are very likely to be earning much more very quickly so happy to give out extreme multiples from the beginning. Blows my mind to be honest but I generally hate too much debt anyway, I have seen first hand the damage it can do many times over.
Panamax said:
The problem with "affordability" testing has been that the tests don't make any sense. They're far too rigid and derive from a mandated tick box approach. Lots of people are being turned down from mortgages they can easily afford. In this regard relaxing the rules makes a great deal of sense.
Whether banks will be able to break with tradition and behave in a sensible fashion is another question entirely.
True.Whether banks will be able to break with tradition and behave in a sensible fashion is another question entirely.
I fail the affordability test as I still help towards the mortgage on the ex marital home.
Yet I somehow manage to pay £1500 a month to rent a pokey flat, and have done for 8 years now.
The affordability checks were a bit of a nightmare.
One of my admin members of staff was renting a 2 bed house (something like £600pcm in North East). The landlord wanted to sell up and offered them the opportunity to purchase it without it going on the market. The duly agreed and applied to get a mortgage. Turned down based on "affordability" checks as the lender felt the £300-£250pcm mortgage was not affordable. They still didn't accept that it being half of the rental payment was a good enough reason to approve and they only way they would offer them a mortgage was with a 30% deposit instead of 15%. They couldn't raise the extra so lost out on the house and had to move out when the landlord sold up.
I would imagine this story is replicated up and down the country on a regular basis so adjusting the approval process to allow common sense would only be a good thing not foregoing the fact the common sense is still removed at when receiving the application
One of my admin members of staff was renting a 2 bed house (something like £600pcm in North East). The landlord wanted to sell up and offered them the opportunity to purchase it without it going on the market. The duly agreed and applied to get a mortgage. Turned down based on "affordability" checks as the lender felt the £300-£250pcm mortgage was not affordable. They still didn't accept that it being half of the rental payment was a good enough reason to approve and they only way they would offer them a mortgage was with a 30% deposit instead of 15%. They couldn't raise the extra so lost out on the house and had to move out when the landlord sold up.
I would imagine this story is replicated up and down the country on a regular basis so adjusting the approval process to allow common sense would only be a good thing not foregoing the fact the common sense is still removed at when receiving the application
pavarotti1980 said:
The affordability checks were a bit of a nightmare.
One of my admin members of staff was renting a 2 bed house (something like £600pcm in North East). The landlord wanted to sell up and offered them the opportunity to purchase it without it going on the market. The duly agreed and applied to get a mortgage. Turned down based on "affordability" checks as the lender felt the £300-£250pcm mortgage was not affordable. They still didn't accept that it being half of the rental payment was a good enough reason to approve and they only way they would offer them a mortgage was with a 30% deposit instead of 15%. They couldn't raise the extra so lost out on the house and had to move out when the landlord sold up.
I would imagine this story is replicated up and down the country on a regular basis so adjusting the approval process to allow common sense would only be a good thing not foregoing the fact the common sense is still removed at when receiving the application
My sister's been stuck in this situation for 20 years now.One of my admin members of staff was renting a 2 bed house (something like £600pcm in North East). The landlord wanted to sell up and offered them the opportunity to purchase it without it going on the market. The duly agreed and applied to get a mortgage. Turned down based on "affordability" checks as the lender felt the £300-£250pcm mortgage was not affordable. They still didn't accept that it being half of the rental payment was a good enough reason to approve and they only way they would offer them a mortgage was with a 30% deposit instead of 15%. They couldn't raise the extra so lost out on the house and had to move out when the landlord sold up.
I would imagine this story is replicated up and down the country on a regular basis so adjusting the approval process to allow common sense would only be a good thing not foregoing the fact the common sense is still removed at when receiving the application
Doesn't earn enough to save the level of deposit she'd need in order to be able to buy around here yet manages to pay substantially more in rent each month and has done so for all that time.
The system is (partially) broken and has been for a long time but there are too many people with vested interests in keeping the rental market high I think.
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