Mortgage rules could be relaxed in major shake-up that would help first-time buyers
Share:
Strict mortgage lending rules that were introduced following the 2008 financial crash could soon be eased to help more people get on the property ladder. The Financial Conduct Authority (FCA) today announced it is looking into simplifying tough borrowing criteria, which could help struggling first-time buyers finally get on the property ladder. Under current rules, lenders are limited in how many large mortgages they can approve.
There is a cap that means no more than 15% of a lender's mortgage book can compromise loans for properties costing more than 4.5-times the buyer’s annual salary - but this could soon be changed to allow people to borrow larger sums. This could be useful for people on lower salaries, providing they can afford their repayments.
Another change reportedly being considered, is to affordability rules that test whether borrowers can still keep up with repayments if interest rates unexpectedly rise. Rental payments may also soon be included as part of your borrowing, rather than focusing just on your income, reports The Times.
Rightmove mortgage expert Matt Smith said: "It is really encouraging that the market regulators are now considering what a review of mortgage affordability could look like. Regulatory change is what we've been calling for, as that is what is needed to truly impact home-mover affordability, particularly for first-time buyers. We've seen some innovative products and schemes announced by lenders to try and do their bit to support home-buyers, but they need support from both the government and regulators to really drive more options for people.".
