HSBC is rumored to consider tightening accessibility testing

The Sunday Telegraph reports that HSBC is considering tightening its mortgage affordability calculations.

Sources tell the newspaper that any changes to its rules would be due to the expected rise in energy costs that households will face following the energy price cap which is expected to rise by more than 50% in April.

The price cap today is set at £1,277.

HSBC declined to comment on accessibility changes. A spokesperson says: “As a responsible lender, we keep our underwriting criteria under review and our affordability models are regularly updated, taking into account key elements of consumer spending.

“We always encourage people to have a healthy relationship with their money and keep an eye on their finances, so when it comes to getting a first mortgage or remortgage their finances are in good shape.”

He adds: “HSBC UK has produced information for people on how to save money on energy which can help them reduce or minimize energy costs which will help their financial health. “

This information covers the use of energy-saving light bulbs, smart thermostats and timers for electrical appliances, as well as information on government support for low-income people.

Late last year, the Bank of England revealed it would consult on withdrawing the affordability stress test in the first quarter of 2022.

Regarding the HSBC rumours, Perenna Co-Founder and COO Colin Bell commented: “It makes sense that major lenders like HSBC are considering more stringent affordability testing in the context of increased energy costs.

“However, this could have adverse consequences on the possibility of refinancing for the most vulnerable customers. In the worst possible scenario, we could see an increase in mortgage prisoners who end up overpaying their mortgage while facing higher energy prices.

“Lenders will have to factor in rising energy prices, rising inflation and rising interest rates when looking at consumer affordability, which will make mortgage transactions more difficult. to be obtained in 2022 compared to 2021.”

Previous The platform reduces high LTV rates; adds new fixes
Next Equity release customers borrowed £12m a day in 2021: key