The Bank of England plans to scrap rules introduced in the aftermath of the financial crisis designed to test whether borrowers could afford their mortgages in the event of significant interest rate rises. The central bank’s Financial Policy Committee said it would withdraw the so-called affordability test from Aug. 1, according to a statement Monday.
“The Financial Policy Committee judged that the loan-to-income flow limit is likely to play a stronger role than the affordability test in guarding against an increase in aggregate household indebtedness and the number of highly indebted households in a scenario of rapidly rising house prices,” according to the statement. Borrowers will still be assessed under the Financial Conduct Authority’s wider lending rules on affordability.