Fixed rate affordability test.

tony3619

Hello. 

I was recently watching an interview with Martin Lewis who hinted at the possibility of banks introducing affordability tests when a fixed rate ends and you apply for a new one. 

He didn't elaborate much but has there been any information about this officially? 

Is it likely to apply to existing customers applying for a new fixed rate with the original mortgage lender or just when trying to switch? 

It all seems abit stupid making people who they think can't afford a fixed rate and moving tho them to a higher variable rate. 

K_S

@tony3619 I don't know what interview you are referring to but generally speaking, when it comes to the end of a fixed term -

- if you are staying with your existing lender, aren't in any arrears, and merely switching to a new fixed product with no change in term or no additional borrowing, it usually does not involve any affordability, income, credit checks etc. This is usually termed as a product-switch/product-transfer/rate-switch.

- if you are moving lenders, then there will be a full affordability assessment and underwriting. This would be a remortgage.

WYSPECIAL

tony3619 said:

Hello. 

I was recently watching an interview with Martin Lewis who hinted at the possibility of banks introducing affordability tests when a fixed rate ends and you apply for a new one. 

He didn't elaborate much but has there been any information about this officially? 

Is it likely to apply to existing customers applying for a new fixed rate with the original mortgage lender or just when trying to switch? 

It all seems abit stupid making people who they think can't afford a fixed rate and moving tho them to a higher variable rate. 

Not seen anything about it but it sounds like it is equivalent of offering the best fixed rates on credit cards to the customers that least need to use them. The more of a risk you are the more you have to pay.