There has been much speculation about rate increases. Is it going to happen? When will it happen? The Bank of England and the Financial Conduct Authority have asked lenders to assess and support borrowers with higher debt levels, who look at reducing their outgoings when rates begin to rise.
For many years now, here in England, people have been taking advantage of the all-time low interest rate set by the Bank of England. As a nation, we carry a lot of debt per person in comparison to some of the other big rich countries – a fact that has changed little since the start of the financial crisis.
Signs that a rate increase is coming, such as the growth in the economy, have led many to speculate that it will begin later in 2015. The Bank of England has openly said that it will not put the rate up until people’s wages are higher, but even then, such stats would not indicate that everyone has experienced a wage increase, easing the burden of their mortgage payments.
Lenders are now required to conduct more stringent affordability checks on borrowers, to ensure that they can manage their repayments now and in the future. This could mean that those who borrowed prior to the stricter lending policy might find it difficult to extend their term or downsize to reduce their outgoings.
As a mortgage professional, you have a duty of care to your customers. Having carried out your CeMAP training and passed the relevant exam, you will be qualified to best advise them based on their individual circumstances.