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Lloyds’ Mike Jones takes aim at regulator’s mortgage stress rate policy

  • 27/09/2018
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The Bank of England’s stress rate on mortgages is a “less than sensible” policy and has made it “too difficult” to get on to the property ladder, Lloyds Bank head of intermediaries Mike Jones told the Legal and General Mortgage Club autumn conference.



Speaking in London, he said borrowers must prove they could pay back mortgage repayments at a rate of three percentage points above reversion rates – in reality this means applicants must be able to afford bill at a rate of between 7-8%.

Referencing the stress tests, Jones said: “We’ve made it much more difficult to get in [to ownership] in the first place… I personally think we’ve made it far too difficult.

In a panel debate at the conference, he added: “Having, in our case a 7.25% stress rate hurdle for someone taking a 2.5% mortgage, you’re building protection against rates rising…

“I think it’s really quite strange that you build 3% protection in case interest rates go up. It shouldn’t be rates go up by a quarter, stress rates go up by a quarter.

“I just think that’s a less than sensible policy.”

Jones also said stamp duty is “enormously regressive” and called for the government to change the tax and remove some of the costs people face to move home.

He said: “We must reduce friction in the market to stimulate demand… Stamp duty has to change.”

Jones described the housing market as troubled and said Help to Buy has altered the market.

He added that the government-backed scheme has allowed people to buy bigger houses than they would have done otherwise, he said.

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