The Intermediary Mortgage Lenders Association (IMLA) has welcomed today’s announcement from the Financial Policy Committee (FPC) regarding the launch of its affordability consultation.
The move comes after the Bank of England revealed the affordability test could have caused around 6% of borrowers – roughly 30,000 per year – to take out smaller mortgages than they would have been able to in the absence of the test.
You can read more on the consultation here.
Kate Davies, executive director, IMLA, said: “After proposals on the topic last year, today’s announcement of a consultation on removing the affordability stress test for mortgage applications will come as no real surprise to the sector, but is still very welcome.
“For some time, IMLA has been arguing that the combination of FCA MCOB rules, loan-to-income (LTI) limits and the 3% stress test have placed unrealistic demands on borrowers when compared to the rates they have actually been paying, or could expect to pay.
“We are particularly interested in the FPC’s analysis that the LTI flow limit is likely to play a stronger role than the affordability test in guarding against household indebtedness, and we shall be considering each measure’s relative effectiveness carefully as we develop our response to the consultation.”
