Featuring on the Accord Mortgages Growth Series podcast, Thomas said he questioned BoE and Financial Policy Council’s (FPC) analysis which suggested just one per cent of purchasers were affected by the stress test. The report said raising a deposit was the biggest barrier to home ownership.
Thomas said: “That [the report] was taking the deposit first, and then looking at the other things that were stopping people from buying.
“But if you look at the affordability constraints before you look at the deposit, actually I think many more people are affected by them and many people who don’t have a five per cent deposit actually do have access to money from relatives or friends that might get them over the line.”
He said the central bank and the FPC were “downplaying” the impact of the rules on buyers.
Speaking of the review of the stress test due to be published this year, Charles Roe, director of mortgages at UK Finance said the removal of it would benefit all consumers, especially first-time buyers.
He said the existing stress test did not put a limit on lending as there were already measures in place by the Financial Conduct Authority when it came to calculating income and affordability.
Roe also said the increasing cost of living would put additional pressures on those hoping to buy their first property.
“That impact is going to disproportionately be felt by first-time buyers where they have stretched their affordability to get on to the housing market and perhaps have less disposable income than second steppers or existing homeowners,” he added.
However, Roe said it was good that the majority of first-time buyers would select fixed rates when buying a home, primarily five-year fixes, meaning they would have the time to increase their income before the rate matured.
Last year’s performance
The podcast primarily looked at the performance of the housing and mortgage markets in 2021 and expectations for this year.
Roe said lenders “coped extremely well” in dealing with payment referrals and mortgage applications.
He added: “As far as I’m aware, there’s no consumer and no house purchaser that didn’t get the mortgage they needed to complete on the due date to meet the stamp duty deadlines.”
Thomas said this year would provide opportunities with remortgaging as focus moved away from purchases.
He added: “I think we’ll see a five per cent increase in remortgages this year, and a similar rate for product transfers as lenders and brokers have more space to focus on these areas after a hectic year with stamp duty last year.”
