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UK mortgage providers’ affordability test to be scrapped, Bank of England confirms

( June 20, 2022, 10:20 GMT | Official Statement) -- MLex Summary: UK mortgage lenders will no longer have to stress test borrowers against a hypothetical interest-rate hike, the Bank of England said today as it confirmed it would drop its affordability test recommendation. The BOE’s Financial Policy Committee consulted in Feb. 2022 on its intention to withdraw the recommendation, which acts as a stress test by specifying a higher and hypothetical interest rate against which would-be borrowers should be tested to assess an individual’s ability to repay the loan. The BOE believes that the existing safeguard of a loan-to-income ratio limit, which provides a 15 percent cap on banks mortgages’ that are 4.5 times or greater than an individual’s salary, already gives sufficient protection.Statement follows. FPC response attached....

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