The Sunday Telegraph reports that HSBC is considering tightening its mortgage affordability calculations.
Sources tell the newspaper that any changes to its rules will be due to the expected rise in energy costs households will face after the energy price cap is likely to increase by more than 50% in April.
Today’s price cap is set at £1,277.
HSBC declined to comment on any changes to affordability. A spokesperson says: “As a responsible lender, we keep our underwriting criteria under review and our affordability models are regularly updated, taking into account key elements of consumer expenditure.
“We always encourage people to have a healthy relationship with their money and keep an eye on their finances, so when it comes to getting a first mortgage or remortgaging their money, we are in good shape.”
He adds: “HSBC UK has produced some information for people on how to save money on energy, which can help them reduce or reduce energy costs, which will help with their financial fitness.”
This information discusses the use of low-energy lights, smart thermostats and timers for electrical appliances, as well as providing information on government subsidies for people on low incomes.
At the end of last year, the Bank of England revealed that it would consult on withdrawing the affordability test in the first quarter of 2022.
On the HSBC rumours, Colin Bell, Perenna’s co-founder and chief operating officer, commented: “It stands to reason that major lenders like HSBC are considering more stringent affordability tests in the context of rising energy costs.
However, this could have serious consequences for the most vulnerable clients’ chances of refinancing. In a possible worst-case scenario, we could see an increase in mortgage inmates who end up overpaying their mortgage while at the same time facing higher energy prices.
“Lenders will need to take into account higher energy prices, higher inflation and higher interest rates when looking at consumer affordability, which will make securing mortgage deals more difficult in 2022 than in 2021.”