Bank of England to review mortgage affordability
The Bank of England’s Financial Policy Committee is to conduct a review of mortgage affordability following concerns that the ongoing Covid-19 pandemic is creating “tight conditions” for borrowers, especially first-time buyers.
Announced on 11 December the review is to examine whether the affordability criteria that borrowers must pass to qualify for a mortgage is still appropriate. The review comes as the number of mortgages available to people with only small deposits has dropped significantly, with lenders responding by becoming more risk averse in the face of the ongoing Covid-19 pandemic. “Mortgage credit conditions remain tighter than at the start of the year, particularly for high loan to value mortgages,” according to FPC meeting notes in December 2020. “This reflects reduced risk appetite from lenders due to the economic outlook, as well as operational constraints in meeting the current high demand for mortgages.”
The Committee is due to report its findings next year.