Overview

• Industry body UK Finance says modest reductions in stress-test rates could widen access to mortgages without materially lifting arrears.
• Its analysis shows 1.75% of borrowers now paying above their original stress-test rate are in arrears, versus 0.21% for those below that threshold.
• UK Finance cautions that loosening rules substantially without more housing supply would likely push up prices and erode affordability.
• Lenders have already begun adjusting affordability assumptions in response to changing market conditions and lower projected interest rates.
• The debate comes as the Bank of England’s base rate has been trending down, a factor lenders cite when reassessing stress assumptions.