Stress Test - 11% mortgage

Jox

Just wondering if anyone heard of this.
We had the appointment with HSBC yesterday and nothing had changed with our salary and finances but now they are doing a "stress test" to see if applicants can cope if the mortgage rate increases to 11% (the mortgage rate they had agreed to offer us was 1.09% fixed for 2 years).
So now they have reduced the amount they will lend us by 20k and we can't buy the house we wanted even though the monthly payments are more than affordable.
Any advice please? Thanks

minimike2

See a broker and look for an alternative lender.

HSBC are one of the most, if not the most strict lender out there. Most lenders will stress at around 6.75% - 7% as per current guidance.

ACG

It is pretty much mandatory for lenders to stress test at a higher rate. Interest rates are at an all time low and I read this morning they will start to rise in the new year due to something in America.

Every lender has their own affordability calculation. You could also potentially look at doing the mortgage over a longer period but then overpaying?

If in doubt, as minimike says, speak to a broker.