There is an opportunity for regulators to reconsider the current mortgage stress test regulations, according to Jeremy Duncombe (pictured), director of intermediaries at Accord Mortgages.
As it currently stands, the stress test must be 3% higher than the prevailing rate at origination – normally the lender’s standard variable rate (SVR).
Duncombe believes that in order to increase support for borrowers, including first-time buyers, regulators could look to whether the current stress rate is still relevant and proportionate.
Accord reduces rates on products up to 90% LTV
He went on to detail, however, that this outcome would only amount to part of the answer, rather than the entire solution.
Duncombe said: “Rates have remained lower than expected since the financial crash when the current stress test requirements were originated.
“As a result, a review of the current rules would be welcome.”
Looking to the Mortgage Guarantee Scheme, revealed during the Budget, Duncombe believes this is a positive step for first-time buyers.
Duncombe said: “Prior to the introduction of the scheme, Accord had planned to reintroduce 95% LTV mortgages but the announcement by the government supported our intention and provided confidence that we wouldn’t be alone in this market.”