TSB will increase its residential affordability stress test to eight per cent, citing expectations of rising interest rates.
The changes come into force from today, with TSB adding that the move was “due to market expectations of future interest rates”.
For residential applications, excluding first-time buyers, the stress rate stands at eight per cent.
For first-time buyers, the stress rate is seven per cent.
The Financial Policy Committee confirmed that the affordability stress test requirement would be withdrawn from August.
It was introduced in 2014 and requires lenders to assess a borrower’s future ability to pay a mortgage based on whether they could make payments if the rate was three per cent above a lender’s reversion rate.
Despite it being withdrawn, many lenders have still maintained the stress test in some form as part of their affordability calculations and in light of rising interest rates.
Brokers added that they expect stress rates to increase as interest rates are projected to rise. This could make affordability, especially for first-time buyers, yet more constrained.
TSB spokesperson said: “We increased our stress rate used to calculate residential mortgage affordability from 7 per cent to 8 per cent (FTB 6 per cent to 7 per cent). We made this change as a result of market expectations of future interest rates.”
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
