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Poll: Has the removal of the affordability stress test impacted the mortgage market?

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  • 17/06/2024
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Poll: Has the removal of the affordability stress test impacted the mortgage market?
Affordability has become increasingly challenged in recent years, with many in the mortgage sector saying that an overhaul is required.

Higher mortgage rates, along with stress tests and the impact of cost of living, have meant a lot of borrowers’ affordability has become challenging.

In 2022, the Financial Policy Committee (FPC) said that it would withdraw the mortgage affordability stress test, which was introduced in 2014 and requires lenders to assess a borrower’s future ability to repay a mortgage.

This is calculated by seeing whether a borrower could repay a mortgage if the mortgage rate was 3% above a lender’s reversion rate.

The loan-to-income (LTI) limit was also introduced at the same time, but was left in place.

At the time, the FPC said that the “additional insurance provided by the affordability test is small”, adding that a “framework without the FPC’s affordability test recommendation would therefore be simpler and more predictable”.

The mortgage market of 2024 is different to that of 2022, but this month Mortgage Solutions is asking: Has the removal of the affordability stress test impacted the mortgage market?

Has the removal of the affordability stress test had an impact on the mortgage market?

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