Lenders urged to make mortgage rule changes to help first-time buyers
Calls to relax mortgage rules to assist homebuyers
- UK Finance suggests that a careful relaxation of mortgage lending criteria, particularly stress tests, could enable more first-time buyers to access the property market without a significant increase in loan defaults.
- The banking and finance body's analysis indicates that a modest easing of stress rates would not substantially increase arrears, even with recent interest rate rises, as most borrowers remain below their initial stress-tested thresholds.
- While current lending rules have successfully kept arrears low, they have also severely restricted many prospective homeowners from securing a mortgage.
- The Financial Conduct Authority (FCA) has initiated a 'public conversation' on the future of the mortgage market, seeking feedback by September 19, to explore ways to assist first-time buyers and other groups.
- UK Finance cautioned that any significant loosening of rules that boosts demand without a corresponding increase in housing supply would likely inflate house prices, negatively impacting overall affordability.