Woolwich tightens affordability calculations
The mortgage sector of Barclays, the Woolwich, has announced that it has recently tightened up its mortgage affordability calculations, which could potentially make it difficult for many borrowers to get a competitive mortgage loan from the lender.
The lender is increasing the interest rate that it uses to calculate affordability, and whilst it has launched a range of competitive new deals this measure may make it difficult for borrowers to access the new deals.
The interest rate used by the Woolwich has gone up from 5.29 percent to 5.69 percent, and this means that those looking for a mortgage with Woolwich will have to prove that they can afford to pay a mortgage at the higher rate of interest in order to qualify.
With many potential buyers already struggling to get a mortgage loan in the increasingly restricted market the move by the Woolwich will come as yet another blow.
One financial advisor, Aaron Strutt, said that it seemed as though the Woolwich was ‘cherry picking’ the lower risk customers by using this measure to assess affordability, and that it would results in a greater number of consumers being excluded from getting the most competitive rates.
He added that it would now be far harder for customers to get the most competitive deals from the already very restricted mortgage market.
However, the Woolwich has defended the move, stating that it is part of responsible lending on the part of Barclays. The lender stated: “The majority of customers are opting for tracker mortgages now so we have changed our affordability rate so that we can ensure that even in this very low base rate environment, our customers will still be able to afford the loan when rates do start to increase. It is important for Barclays from a responsible lending point of view.”
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