this post was submitted on 22 Jun 2023
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UK Politics

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Sunak will be feeling the pressure from this if inflation doesn't actually come down.

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[–] [email protected] 3 points 1 year ago (1 children)

Same here. Although I distinctly remember my mortgage provider asking us if we were comfortable if the interest rate went up. Multiple times. I'm pretty sure they "stress tested" our mortgage payments assuming 9 - 10% interest. Of course we told them it would be hard, but still within our budgets then laughed and said it would never happen.

I've got sympathy for people in this situation for sure... but how have they managed their household budgets and savings such that this is a shock to them? Or have they over stretched themselves with their mortgage?

[–] [email protected] 2 points 1 year ago (1 children)

I remember looking at the 10% stress test on the paperwork and thinking "oof", but feeling a bit safer that people are at least being made aware of this when they take out a mortgage.

This was brought in last year to change the way stress testing on applicants runs. Previously, you had to be able to withstand 7% (iirc, don't quote me), it's now a 1% rise stress test, though the 4.5x salary limits still apply.

[–] [email protected] 1 points 1 year ago

AHH interesting that makes more sense then because we remortgaged before those changes in the rules.

As an example, a borrower taking out a two-year fixed-rate mortgage at 2.2% with a revert to rate of 4% would need to show they could afford the monthly repayments on a rate of 7%.

I mean... they ain't going to be coming off onto the 4% 🥲 but stress testing at 7% should still (for the time being) mean that everyone with a mortgage should have been aware of the risks and budgeted accordingly. No?

No-one wants to pay more of course.... I have sympathy for that. I just don't understand the shock that some people are claiming.