You are here: Home - News -

Up to 10% more applicants could fail mortgage affordability tests after BBR rise – UKFI conference

  • 09/11/2017
  • 0
Up to 10% more applicants could fail mortgage affordability tests after BBR rise – UKFI conference
Attendees at the UK Finance Annual Mortgage Conference yesterday heard that 5-10% more applicants who would have qualified for mortgages will likely fail stress tests due to rising SVRs.

On inter-generational mortgages, Richard Rowntree, managing director of UK Mortgages at Bank of Ireland, said that increases in standard variable rate (SVR) following the November base bank rate (BBR) rise to 0.5% from 0.25%, will make mortgages even more inaccessible to aspiring homeowners.

“Because we now need to stress at 3% above SVR, with base rate SVRs increasing – that’s likely to increase even further and exacerbate this problem. So we’re likely to see another 5-10% of those who would’ve been able to pass our affordability stress tests now failing because we’re having to link [affordability] to a higher SVR,” Rowntree said.

“And that’s all responsible and that’s all great, but it doesn’t get away from the fact that when you look at the number of those who own their own homes in that bracket of 20-29, it has reduced significantly,” he continued.


The statement comes in the context of stagnating income levels, leaping house prices, and rising consumer dissatisfaction with affordability.

Earlier this year, over 180,000 people signed a petition demanding that parliament debate whether rental payments should be considered as a measure of affordability.

“For the person on the street who’s actually sitting there thinking ‘I’m paying more in rent than I would do on a pay-rate for a mortgage, and that’s been the case since 2008 – I’ve been paying off my landlord’s mortgage, and that’s not fair’, I understand that, I get that,” said Rowntree.

However, Rowntree said that renters simply aren’t aware of the stress tests imposed by affordability regulations.

“The gap [of stress testing] is what’s not seen, and not necessarily explained by brokers and lenders alike,” he said.

And the responsibility is on both the public and private sectors to close that gap in awareness and affordability, Rowntree said.

“The government can’t solve this on its own – we certainly can’t solve it on our own from a private perspective.”

“Something else needs to happen, tenure needs to change, or we need some other mechanisms to support those who want to get their feet on the housing ladder earlier,” he added.

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @robjupp: Great day yesterday for donations to @MortSleepOut. With Gift Aid, we are now close to £17,000. It would be great to get to £2…

Read previous post:
Modern Methods of Construction and new ‘players’ critical to solving UK housing shortages – UKFI conference

To address the chronic shortage of housing supply in the UK, panelists at the UK Finance Annual Mortgage Conference say...