It was recently announced that the mortgage borrowing rules have been eased after the Bank of England scrapped an affordability test. If you're covering the news, please see a comment from a personal finance expert (Brean Horn from NerdWallet) below. I hope this is useful, but please let me know if you need any more informaion.
Brean Horne from NerdWallet, said: “Scrapping the mortgage affordability test sounds severe. In reality, the impact of the change will be limited – the same fundamental equation remains, as a borrower’s income will be weighed up against the size of their deposit, the size of the loan and the value of the property. Ultimately, the same issues will remain for would-be homebuyers.
“The latest data shows that average house prices in England are 9.1 times an annual salary – the ratio has become larger and larger in recent years. And, as prospective buyers have to contend with the rising cost of living and increasing inflation, getting onto the property ladder has never been more challenging.
“Understandably, many prospective buyers will be monitoring house prices carefully in the hopes of a market cooldown. They will also hope that the scrapping of the mortgage affordability test will be in their favour. However, it’s important to remain proactive and prepare for the opportunity to purchase a property when it arises.
“Buyers will strengthen their position by taking the time to evaluate their finances. This includes looking at their income, expenses, personal savings, credit history and outstanding debts to get a clear idea of their budget and the types of property they can afford. Additionally, prospective homeowners should carefully consider any mortgage offers and shop around for the best rates and loan-to-value options.
“Using online tools like comparison websites can be beneficial and speed up the process. Will the cost-of-living crisis and rising interest rates bring house prices back down? Only time will tell. Either way, it is unlikely to reverse years of steep price jumps that have dented the hopes of first-time buyers.
“Buyers who do their research and prepare now will put themselves in a better position to purchase property when the time is right for them.”