HSBC may tighten mortgage lending criteria

HSBC may tighten mortgage lending criteria

HSBC may introduce stricter affordability tests for mortgage products due to the effects of inflation which, experts say, may reduce the amount that its customers can afford to pay.

The bank is reportedly reviewing its current mortgage lending criteria amid concerns that the rising cost of living and rocketing house prices are putting an additional strain on people’s finances, reducing the amount that they can realistically afford to repay.

Tax raises and increasing energy bills all loom on the horizon this year, which along with inflation and house prices, are expected to compound existing affordability and financial issues even further.

Speaking to the Times, an HSBC spokesperson commented:

We wouldn’t comment on speculation, but I can say that our mortgage lending decisions are based on affordability and as a responsible lender, we keep our underwriting criteria under review.

We would 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 remortgaging their finances are in good shape.”

The news comes as experts predicted that mortgage lending conditions for the first quarter of 2022 would loosen rather then become more stringent, and an announcement from mortgage technology and data provider Twenty7Tec reporting that Monday 17th January 2022 was the busiest day for mortgage searches on its platforms for over two years.

Nathan Reilly, Director of Lender Relationships at Twenty7Tec commented:

The past few days have been incredibly busy and we’ve not known a start to the year quite like it. Yes, the market was down a little in December – even lower than expectations – as we reported in our Monthly Mortgage Market Report, but the pick-up in January has more than made up for that deficit so far.

Up to close of business last night, we are already at 84.96% of December’s mortgage searches and at 51.96% of November’s mortgage search total, with two full weeks of trading left to take place.

Early January can often be a quieter period – especially as people drift back in from an extended break. But, after an exceptional 2021, it’s encouraging to see such strong and positive results for the new year.”

Today's Conveyancer

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