Too many loans are denied to those able to manage them


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Outlook The mortgage market picked up in April, defying predictions of a pre-election slump. Perhaps that shouldn’t surprise us. While the Bank of England’s affordability tests are likely to keep approvals well below their pre-crisis heights, there is much pent up demand in the market and some of the deals on offer are extremely competitive.

Those borrowers lucky enough to have been accepted by their lender may simply have decided to strike with the iron hot, regardless of the election. The good news is that lenders and borrowers seem to be getting used to the new rules and are starting to navigate them effectively.

Fears of a crisis sparked by an interest rate rise – many households looked stretched even with rates at 0.5 per cent – may also be easing, with inflation low and real incomes finally starting to rise. Is it time, then, to review those tests?

Caution on the part of the Bank is understandable. Responsibility on the part of lenders – even if it had to be forced on them – is welcome. And no one wants to see the housing market turn into a runaway train. Still, nearly half of those who apply for mortgages are now being rejected. Some of them could almost certainly manage the loans they were applying for. In the interests of fairness, if nothing else, it might be worth the two sides considering how more of those people could be accommodated under the new regime.