As of 9 October, the lender will up income multiples for later life purchase and remortgage with capital raising from 4.49x to 5x income for interest-only and from 4.49x to 5.5x for repayment.
The stress rate for pound-for-pound remortgages has also been cut.
Hodge will accept life insurance policies to support affordability under the death stress test and the lender will reduce living costs to reflect the cut in the energy cap from 1 October.
Hodge: ‘Affordability a challenge’
Louise Swainston, head of mortgage risk at Hodge, said: “Affordability continues to remain a challenge for mortgage customers across the market as interest rates remain high and the cost of living continues to rise.
“To help support our intermediary partners and their customers meet affordability hurdles, we have factored the news of the decrease in the Ofgem energy price cap into our affordability assessment, as well as reducing our stress rates for like for like remortgage borrowing.”
She added: “We have also increased our loan to income caps to 5x-for interest-only lending and 5.5x on repayment, and for pound for pound remortgage borrowing we continue to lend up to 6x income on our later life product range.
“Also, we will now consider a life insurance policy in our affordability assessment. This will support customers who fail the death stress allowing us to assess affordability based on the policy covering or partly covering the loan in addition to their personal income.”
Emma Graham, business development director at Hodge, continued that the criteria enhancements would “help customers, particularly those who are looking to remortgage, with any affordability issues in mind”.
She noted: “In particular, we believe the relaxation of the stress testing will be beneficial to many customers at a time when they need it the most.
“Our later life products allow for debt consolidation and assess interest-only mortgages on an interest-only basis. So, as a lender, we believe we are doing all we can to help our intermediaries navigate the affordability challenge they are facing at the moment.”
