UK mortgage lenders told they can scrap affordability rule for buyers

[russellshire]

From the Guardian:

Quote

Lenders will no longer have to check whether homeowners could afford mortgage payments at higher interest rates after the Bank of England has ditched a rule originally designed to avoid another 2007-style credit crunch.

There were a few rumours about this happening, and here it is. Could be a huge boost to the boom phase of the property cycle allowing people's borrowing to keep up with rising prices. Of course taking away stress-tests on interest rate rises, just as interest rates are rising could lead to some risky borrowing!

What do we think? Bold move to boost the market or removing an important safety net right when it's needed most?

[EvolutionBlogger]

I don't think they have any choice. The rules don't really work in this high inflation environment

[Mark Rocks]

Apparently this rule is only going to apply to owner-occupiers, so BTL investors will still have to adhere to the stress-tests. I think that's smart, as scrapping the rules entirely could result in a dearth of people getting into investing before they're ready (both financially and in general)...https://www.reuters.com/world/uk/bank-england-withdraws-mortgage-affordability-test-2022-06-20/

[EvolutionBlogger]

I 100% agree with that sentiment of @Mark Rocks. The last thing I want is everybody piling into Buy To Let and making prices even more unaffordable