Overview

• UK Finance says modestly lowering stress-test rates could expand access to mortgages, particularly for first-time buyers, without a significant rise in arrears.
• Its analysis shows 1.75% of borrowers paying above their prior stress-test rate are in arrears versus 0.21% of those paying below that level.
• The industry body notes many lenders have already adjusted affordability tests following Bank of England guidance earlier this year.
• UK Finance cautions that loosening rules without more housing supply could push up prices and erode affordability.
• The regulator emphasises consumer protection and warns broader access to credit may involve accepting some increased risk of future arrears.