The UK’s financial regulator, the Financial Conduct Authority (FCA), have recently published a letter discussing how they want to ease mortgage rules. Many strict rules were brought in in 2008, after a financial crisis, however, with a need to boost the economy and a nationwide struggle for individuals to acquire the mortgage they need, changes are being brought in.
The stricter rules were brought in after the financial crisis to ensure that everyone taking out a mortgage could repay it; to stop people who were excessively lending. The FCA evidenced that there is currently a minimal number of borrowers missing repayments, which gives motion to the fact that the rules are too strict.
Although the confirmed details have not been released yet this should mean that more people can access mortgages on softer terms. As mortgages can be inaccessible to lots of people, it will hopefully give people more of an opportunity to get onto the property ladder. The FCA pointed out that they are wanting to look at the balance between protecting borrowers and access to home loans, which would look to help benefit to purchaser.
As Stamp Duty Land Tax thresholds are changing in April, these newer mortgage rates could be seen to counteract this change. The changes are as follows-
- Zero rate thresholds will drop from £250,000 to £125,000
- First time buyer thresholds will drop from £425,000 to £300,000
- First time buyer relief of lower rates will drop from £625,000 to £500,000
The changing rates could mean a decline in house purchases, affecting the property market. Many people believe that the lower mortgage rates are a way to keep balance with the changing stamp duty thresholds; to keep the property market busy. As individuals will be paying more tax on their house purchase, the lower stamp duty rates should ease the impact this will have.
