Affordability quirks affect mortgage eligibility

New rules from the regulators on affordability are restricting maximum mortgage loans on offer, says the Daily Mail.

The rules require lenders to ‘stress test’ all mortgages to see if borrowers could still afford the monthly repayments if interest rates rose to 7%. The rules have odd side effects, such as parents with young children being eligible for smaller loans because until children are of school age, lenders assume parents will pay higher childcare costs and therefore have less disposable income. Mortgage brokers say the rules also mean it now typically takes four rather than two weeks to secure a lender’s approval for a loan.