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Lenders in no rush to scrap Bank of England’s stress test

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  • 01/08/2022
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Lenders in no rush to scrap Bank of England’s stress test
Lenders are no longer obliged to stress test borrowers from today, but many providers are expected to carry on using the measure regardless.

 

The Bank of England announced in June it would scrap the affordability test, which examines whether borrowers could afford a three per cent rise in interest rates.

The move has been celebrated as making it easier for some borrowers to get on the ladder.

However, with interest rates rising at the fastest pace in decades, it seems lenders are reluctant to let go of the measure just yet.

Santander confirmed to Mortgage Solutions there would be no immediate change in the way it assesses applications.

A spokeswoman said: “We are continuing to review the Financial Policy Committee’s recommendations and will inform our customers and brokers of any changes to our stress rates.”

Barclays, Halifax and HSBC did not return a request for comment on the issue, while NatWest and Nationwide said the information was commercially sensitive.

However, Mortgage Solutions understands that when asked in an Intermediary Mortgage Lender’s Aassociation meeting no lender said they had made any changes to affordability calculations or assessments as a result of the change.

There is a sense that no lender is willing to break rank on the issue just yet.

Chris Sykes, technical director at Private Finance said: “Building societies are asking us what other lenders are doing.

“We’ve barely heard from any lender what their plans are in relation to the change.”

However, in the longer term it is expected that lenders will embrace the opportunity to remove the test.

Greg Cunnington, chief operating office at LDN Finance said he understands all major lenders want to lower their requirements in this area.

He added: “This should help equalise the lower borrowing from the higher Office for National Statistics data now used, so will be a real positive.”

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