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