chris-flexen-GDaAgR9T7Kc-unsplash

The Bank of England have today issued a consultation on changing the affordability tests for large mortgages in the wake of the global financial crisis. Whilst house prices continue to increase is this the right way forward? Lynne Lancaster Head of Estate Agency at PFK said "We are seeing some clients who are looking for larger mortgages find themselves in a far more beneficial position given their equity has grown substantially on their current property in line with price increases. However, I remember a time when lenders would lend in excess of property values sometimes up to 125% loan to value and this became a major issue when the market fell and people where stuck in negative equity without any way out…. I agree that affordability tests have become increasingly draconian however a sharp eye needs to be kept on the loan to value ratio so we do not experience the previous mistakes that have been made and I also believe lenders need to continue to be supportive to those buying for the first time who cannot rely on equity growth".