Mortgage 'stress tests' blamed for market gridlock
The newly-introduced mortgage 'stress tests' are already having an impact on the property market, it has been revealed, as applicants see their offers slashed.
The new interviews, which can last up to three hours, were introduced in response to a market review by the Financial Conduct Authority, in a bid to prevent the reckless lending that prompted the financial downturn back in 2008.
And according to the Daily Mail, a report due out later this week will show that remortgage applications fell by 12 per cent last month, which could lead to gridlock in the property market.
The paper reports that some applicants have been subjected to 'intrusive' questions, including plans for more children in the future, whether they are paying for golf membership, and how much they spend on haircuts.
As a result of the tests, which are designed to show whether borrowers would be able to cope should interest rates rise, some applicants are seeing their offers slashed by 50 per cent.
Ray Boulger, from mortgage broker John Charcol, told the Mail yesterday that families were the likely to be hardest hit by the new lending rules, saying: "The most common reason to knock people back is childcare costs. It's particularly bad if people have more than one child, or they are under school age.
"There are aspects of the rules that make it difficult for lenders to apply common sense."
Figures from John Charcol reveal that the 'stress tests' can cause banks to but their offers by as much as £100,000.
However, a spokesman for the FCA said: "The review is about ensuring that lenders are asking the right questions to ensure they're giving loans to people who can afford them. There will be more consistency as these rules are applied and things bed down."
What do you think? Are the new mortgage stress tests intrusive, or are you in favour of this more responsible lending approach? Leave your comments below...