Affordability Test To Be Scrapped.22nd of June, 2022
Lenders will no longer have to check whether homeowners can afford mortgage payments at higher interest rates after the Bank of England scrapped a rule originally designed to avoid another 2008 style credit crunch.
The Bank of England, confirmed that it would scrap the affordability test (stress test) after determining that other rules were likely to play a stronger role in guarding against an increase in household debt.
Following its latest review of the mortgage market, the Financial Policy Committee confirmed that it will withdraw its affordability test recommendation and this will come into effect from 1 August 2022.
Introduced in 2014 the test specifies a stress interest rate for lenders when assessing prospective borrowers’ ability to repay a mortgage.