Bank of England to relax mortgage rules – .

Bank of England to relax mortgage rules – .

At the same time, SVRs have remained stable between 3.6% and 4.6% over the past decade, even as initial mortgage rates have plunged, making the test more difficult than initially expected.

As a result, the Bank of England is considering easing the affordability control, potentially reducing additional interest charges from its current level by three percentage points.

Martin Beck of the EY Item Club said the move would be “strange given the flexibility of mortgages – it hasn’t been difficult to get a loan.”

But he added that changing the rules after the stamp duty holiday ends means officials “don’t add fuel to the fire; they support the market at a time when headwinds are forming ”.

Berenberg Bank’s Kallum Pickering said the rule change might be proportionate, as banks built up larger capital reserves in the years following the financial crisis, meaning they can bear the losses due to risky loans without reducing lending to the rest of the economy.

At the same time, households are not heavily in debt by historical standards, with many racking up significant savings from Covid lockdowns.

David Hollingworth, of L&C Mortgages brokerage, said the rules apply especially to first-time buyers who typically need to build up a large deposit and then stretch out to get a large mortgage to access the housing ladder.

The authorities are also revising the rule that limits loans to buyers who borrow more than 4.5 times their income.

Currently, these large loans cannot represent more than 15% of a bank’s total loans.

The Bank of England declined to comment.


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