As of today, Gen H has begun to differentiate between its 2- and 3-year and its 5-year products in its stress testing.
This change will enable some aspiring homeowners to borrow up to 25% more on 5-year products.
This change has already had a positive impact on borrowers. In one instance, a married couple earning approximately £20,000 and £40,000 respectively with moderate monthly commitments needed £289,000 to purchase a home – but under the previous stress rate structure, the loan was unaffordable.
Following the stress rate changes, they were able to borrow a maximum of £303,000 on a 5-year product and purchase the home they wanted.
This isn’t an isolated case; now, many applicants could benefit from boosted affordability on a 5-year product if it’s right for them.
At the same time, the lender is introducing two new loan-to-income multiple (LTI) caps: applications with a gross income of less than £50,000 and cases with income boosters will be subject to a 4.49x LTI cap.
These updates align Gen H with the wider market, and existing LTI caps remain unchanged.
Intermediaries on Gen H’s panel will see the changes reflected within their application journeys on Gen H Pro, the lender’s proprietary case management platform.
Pete Dockar, chief commercial officer at Gen H, said: “The volatility that has characterised the interest rate environment over the last year has a lot of customers searching for stability.
“For many, a longer fixed interest term is just the thing. That’s what makes this change so positive – customers can find the longer term peace of mind they’re hoping for without sacrificing affordability.”
