A mortgage shake-up could see homeowners handed a £19,000 boost on house prices. Rule changes mean buyers could borrow up to £40,000 more than before, easing affordability pressures, it has been revealed.
Relaxed mortgage stress testing rules could add £19,000 to average UK house prices over the next five years, according to analysts. The change could spark an upturn in property prices – measuring up to 7.5 per cent.
The shake-up could also help boost first-time buyer transactions by between 14 per cent and 24 per cent, potentially helping more than 80,000 additional buyers onto the property ladder.
Lucian Cook, head of residential research at Savills, said: “Change would not be immediate, with the impact on house prices and transactions likely to take place over a period of five years. But in the medium to long term, the market would feel the knock-on effect of a widening pool of buyers.”
He added that whilst the changes would be “good news for housing delivery”, they were “unlikely to be enough to allow the Government to hit its housebuilding targets”.
Mark Eaton, chief operating officer at April Mortgages, warned: “Reducing stress testing on short-term mortgage products to help people borrow more money is a potentially risky manoeuvre.”
Emma Reynolds, the City minister, said: “For too long politicians have ducked and dodged the decisions needed to support homeownership.
“Simplifying responsible lending rules and putting in place a permanent mortgage guarantee scheme shows our commitment to making the dream of owning a home a reality.”
Labour Party Housing Minister Matthew Pennycook added in a statement this week: “The affordability challenges facing first-time buyers mean that we now have a generation locked out of homeownership.
“This Government is determined to change that, ensuring that young families and hard-working renters can buy a home of their own.”
Contact one of our highly experienced mortgage advisors today on 0121 500 6316 to discuss your mortgage needs.
