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I am perplexed by the guardian's rosy framing of this decision. Unless the bank of England is somehow absolutely certain that the interest rates won't go up mor

by mateo1 4y ago

I am perplexed by the guardian's rosy framing of this decision. Unless the bank of England is somehow absolutely certain that the interest rates won't go up more than 3% in the coming decade, in my non-expert opinion it seems like either a short term patch for something or just another attempt to keep the housing market inflated. At the expense of regular people of course.

jelliclesfarm 4y ago
It is entirely mind boggling. I was hoping someone from UK can share the justifications offered by the banks and their perspective on this.
- jlokier 4y ago
  Here's my understanding: The mortgage lenders have two kinds of check on your income/expenses situation: Affordability, and income. (In addition to credit history and things like that.) They are keeping the income limits: it's not like they are now going to lend with no criteria. The BoE has decided the additional affordability tests they added many years ago are no longer required for stability of the system and household debt statistics. There are reports the affordability test interviews, when they came in, were sometimes much more intrusive, asking about your personal life and personal spending habits (eg. do you eat out). The criteria made it impossible for some people to obtain a mortgage who could obviously afford one (eg if they have paid similiar levels of rent for years).. I have seen finance articles describe the affordability tests in place as ironically making lending less affordable to many people who had the ability to pay. One class of people I now imagine will have greater access to mortgages is self-employed types whose non-standard, irregular income structure used to have to be "self-certified" to get one. That went away, and it became much harder for them to get mortgage at all. Perhaps these will make a comeback.
zaphirplane 4y ago
There is no certainty that rent will not increase proportionally either, in fact this wave of inflation ensures rent will increase Of course people have the option of buying in a cheaper area or buying something that needs improvement But I find it strange to say to a family, on average families spend x on holidays or a single person in this age bracket spends this much going out, therefore so will you

by mateo1 4y ago

jelliclesfarm 4y ago

It is entirely mind boggling. I was hoping someone from UK can share the justifications offered by the banks and their perspective on this.

jlokier 4y ago
Here's my understanding: The mortgage lenders have two kinds of check on your income/expenses situation: Affordability, and income. (In addition to credit history and things like that.) They are keeping the income limits: it's not like they are now going to lend with no criteria. The BoE has decided the additional affordability tests they added many years ago are no longer required for stability of the system and household debt statistics. There are reports the affordability test interviews, when they came in, were sometimes much more intrusive, asking about your personal life and personal spending habits (eg. do you eat out). The criteria made it impossible for some people to obtain a mortgage who could obviously afford one (eg if they have paid similiar levels of rent for years).. I have seen finance articles describe the affordability tests in place as ironically making lending less affordable to many people who had the ability to pay. One class of people I now imagine will have greater access to mortgages is self-employed types whose non-standard, irregular income structure used to have to be "self-certified" to get one. That went away, and it became much harder for them to get mortgage at all. Perhaps these will make a comeback.

zaphirplane 4y ago

There is no certainty that rent will not increase proportionally either, in fact this wave of inflation ensures rent will increase Of course people have the option of buying in a cheaper area or buying something that needs improvement But I find it strange to say to a family, on average families spend x on holidays or a single person in this age bracket spends this much going out, therefore so will you