More Stringent Lending Criteria

A survey carried out by a leading property website showed that 40% of respondents said securing a mortgage was harder now than it was three months ago.

Alongside the Mortgage Market Review (MMR) rules the Financial Policy (FPC) Committee added an extra layer of prudence to lending policies.

Mark Carney announced an income multiple cap of 4.5 times borrowers’ income, stipulating lenders must not hold more than 15% of their new loan book on high loan-to-income (LTI) ratios.

The FPC said lenders should apply a stress test to assess if borrowers could still afford their mortgages if, at any point over the first five years of the loan, Bank base rate were to be 3% higher than the rate at origination.

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