Move brings borrowing costs to highest level since April 2008 as Bank intensifies efforts to control inflation

Sunak will be feeling the pressure from this if inflation doesn’t actually come down.

  • GreatAlbatrossMA
    2·
    1 year ago

    I remember looking at the 10% stress test on the paperwork and thinking “oof”, but feeling a bit safer that people are at least being made aware of this when they take out a mortgage.

    This was brought in last year to change the way stress testing on applicants runs. Previously, you had to be able to withstand 7% (iirc, don’t quote me), it’s now a 1% rise stress test, though the 4.5x salary limits still apply.

    • mannycalavera@kbin.social
      1·
      1 year ago

      AHH interesting that makes more sense then because we remortgaged before those changes in the rules.

      As an example, a borrower taking out a two-year fixed-rate mortgage at 2.2% with a revert to rate of 4% would need to show they could afford the monthly repayments on a rate of 7%.

      I mean… they ain’t going to be coming off onto the 4% 🥲 but stress testing at 7% should still (for the time being) mean that everyone with a mortgage should have been aware of the risks and budgeted accordingly. No?

      No-one wants to pay more of course… I have sympathy for that. I just don’t understand the shock that some people are claiming.