Stress testing – increasing the stress of getting a mortgage?


Barclays is the latest lender to tighten its mortgage criteria by increasing its affordability stress test for residential mortgages to 6.99 per cent from tomorrow.

Previously set at 6.74 per cent, Barclays announced the increase after the Financial Policy Committee (FPC) issued new guidelines on affordability. The FPC said lenders must consider how a 3 per cent increase in the base rate in the first five years of a loan would affect a borrower’s ability to repay their mortgage.

Most lenders already impose a 7 per cent stress test so Barclays is bringing itself into line with most other high-street banks.

Other lenders, such as RBS and Lloyds, have also capped large mortgage loans. With banks assessing affordability in different ways, particularly if applicants have young children, borrowers must seek independent advice before applying for a mortgage to ensure they are in the best possible position to get the lending they require.

Adrian Anderson
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Adrian Anderson